enva-10q_20180331.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 ☒

33,876,781 of the Registrant’s common shares, $.00001 par value, were outstanding as of April 30, 2018.

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.

	March 31,						December 31,
	2018			2017			2017
Assets
Cash and cash equivalents	$	69,900		$	97,030		$	68,684
Restricted cash (includes restricted cash of consolidated VIEs of $26,746, $17,815 and $21,696 as of March 31, 2018 and 2017 and December 31, 2017, respectively)		34,765			25,610			29,460
Loans and finance receivables, net (includes loans of consolidated VIEs of $302,743, $225,473 and $282,724 and allowance for losses of $24,471, $17,879 and $22,728 as of March 31, 2018 and 2017 and December 31, 2017, respectively)		703,076			515,463			704,705
Income taxes receivable		—			3,004			4,092
Other receivables and prepaid expenses		22,164			18,059			23,817
Property and equipment, net		47,698			44,279			48,525
Goodwill		267,013			267,011			267,015
Intangible assets, net		4,058			5,136			4,325
Other assets		9,526			9,821			8,837
Total assets	$	1,158,200		$	985,413		$	1,159,460
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	70,473		$	70,485		$	77,123
Income taxes currently payable		257			—			—
Deferred tax liabilities, net		17,087			25,338			12,108
Long-term debt (includes long-term debt of consolidated VIEs of $217,125, $145,449 and $211,406 and debt issuance costs of $2,666, $1,419 and $3,271, as of March 31, 2018 and 2017 and December 31, 2017, respectively)		754,650			631,117			788,542
Total liabilities		842,467			726,940			877,773
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares authorized, 34,340,242, 33,596,007 and 33,932,673 shares issued and 33,862,388, 33,488,159 and 33,504,555 outstanding as of March 31, 2018 and 2017 and December 31, 2017, respectively		—			—			—
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding		—			—			—
Additional paid in capital		32,671			20,766			29,781
Retained earnings		294,215			249,307			264,695
Accumulated other comprehensive loss		(4,322	)		(10,440	)		(7,086	)
Treasury stock, at cost (477,854, 107,848 and 428,118 shares as of March 31, 2018 and 2017 and December 31, 2017, respectively)		(6,831	)		(1,160	)		(5,703	)
Total stockholders' equity		315,733			258,473			281,687
Total liabilities and stockholders' equity	$	1,158,200		$	985,413		$	1,159,460

	Three Months Ended
	March 31,
	2018			2017
Revenue	$	254,298		$	192,263
Cost of Revenue		108,553			81,884
Gross Profit		145,745			110,379
Expenses
Marketing		27,736			19,583
Operations and technology		25,538			23,531
General and administrative		26,921			25,696
Depreciation and amortization		3,838			3,497
Total Expenses		84,033			72,307
Income from Operations		61,712			38,072
Interest expense, net		(19,673	)		(17,222	)
Foreign currency transaction (loss) gain		(2,088	)		227
Loss on early extinguishment of debt		(4,710	)		—
Income before Income Taxes		35,241			21,077
Provision for income taxes		7,343			7,225
Net Income	$	27,898		$	13,852
Earnings Per Share:
Net income per common share:
Basic	$	0.83		$	0.42
Diluted	$	0.81		$	0.41
Weighted average common shares outstanding:
Basic		33,669			33,372
Diluted		34,572			34,036

									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, 2016		33,365	$	—	$	18,446	$	235,455	$	(11,578	)		(71	)	$	(624	)	$	241,699
Stock-based compensation expense		—		—		2,320		—		—			—			—			2,320
Shares issued under stock-based plans		231		—		—		—		—			—			—			—
Net income		—		—		—		13,852		—			—			—			13,852
Foreign currency translation loss, net of tax		—		—		—		—		1,138			—			—			1,138
Purchases of treasury shares, at cost		—		—		—		—		—			(37	)		(536	)		(536	)
Balance at March 31, 2017		33,596	$	—	$	20,766	$	249,307	$	(10,440	)		(108	)	$	(1,160	)	$	258,473

Balance at December 31, 2017		33,933	$	—	$	29,781	$	264,695	$	(7,086	)		(428	)	$	(5,703	)	$	281,687
Stock-based compensation expense		—		—		2,433		—		—			—			—			2,433
Shares issued under stock-based plans		407		—		457		—		—			—			—			457
Net income		—		—		—		27,898		—			—			—			27,898
Foreign currency translation gain, net of tax		—		—		—		—		4,386			—			—			4,386
Purchases of treasury shares, at cost		—		—		—		—		—			(50	)		(1,128	)		(1,128	)
Reclassification of certain deferred tax effects		—		—		—		1,622		(1,622	)		—			—			—
Balance at March 31, 2018		34,340	$	—	$	32,671	$	294,215	$	(4,322	)		(478	)	$	(6,831	)	$	315,733

	Three Months Ended
	March 31,
	2018			2017
Cash Flows from Operating Activities
Net Income	$	27,898		$	13,852
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,838			3,497
Amortization of deferred loan costs and debt discount		1,541			1,609
Cost of revenue		108,553			81,884
Stock-based compensation expense		2,433			2,320
Loss on early extinguishment of debt		4,710			—
Deferred income taxes, net		3,388			10,400
Other		55			—
Changes in operating assets and liabilities:
Finance and service charges on loans and finance receivables		2,346			9,418
Other receivables and prepaid expenses		2,015			1,203
Accounts payable and accrued expenses		(8,124	)		(1,032	)
Current income taxes		4,349			(3,286	)
Net cash provided by operating activities		153,002			119,865
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		(378,099	)		(273,990	)
Loans and finance receivables repaid		270,018			228,188
Purchases of property and equipment		(3,349	)		(2,156	)
Other investing activities		24			2,367
Net cash used in investing activities		(111,406	)		(45,591	)
Cash Flows from Financing Activities
Borrowings under revolving line of credit		32,000			—
Repayments under revolving line of credit		(24,000	)		—
Borrowings under securitization facility		55,300			22,700
Repayments under securitization facility		(49,581	)		(42,670	)
Repayments of senior notes		(50,000	)		—
Debt prepayment penalty paid		(3,656	)		—
Proceeds from exercise of stock options		457			—
Treasury shares purchased		(1,128	)		(536	)
Net cash used in financing activities		(40,608	)		(20,506	)
Effect of exchange rates on cash, cash equivalents and restricted cash		5,533			2,632
Net increase in cash, cash equivalents and restricted cash		6,521			56,400
Cash, cash equivalents and restricted cash at beginning of year		98,144			66,240
Cash, cash equivalents and restricted cash at end of period	$	104,665		$	122,640

Supplemental Disclosures
Loans and finance receivables renewed	$	84,544		$	68,183

The consolidated financial statements of the Company reflect the historical results of operations and cash flows of the Company during each respective period. The consolidated financial statements include goodwill and intangible assets arising from businesses previously acquired. The financial information included herein may not be indicative of the consolidated financial position, operating results, changes in stockholders’ equity and cash flows of the Company in the future. Intercompany transactions are eliminated. Certain amounts in the consolidated financial statements for prior years have been reclassified to conform to the current consolidated financial statement presentation.

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 consolidated financial statements presented as of March 31, 2018 and 2017 and for the three-month periods ended March 31, 2018 and 2017 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 the three-month period are not necessarily indicative of the results that may be expected for the full fiscal year.

These consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 and related notes, which are included on Form 10-K filed with the SEC on February 26, 2018.

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

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet (in thousands):

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, origination 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 and origination fees are 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 May 2009 and October 2009, the Company began providing services in Australia and Canada under the brand name DollarsDirect. 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 stopped originating loans in those countries and have wound down our loan portfolios. During the quarter ended March 31, 2018, the Company continued the liquidation process of the legal entities related to Australia and Canada and recorded a $2.3 million loss to “Foreign currency transaction (loss) gain” in the consolidated statements of income to recognize the cumulative translation adjustment balance that had been previously recorded to “Accumulated other comprehensive loss” on the consolidated balance sheets.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement - Reporting Comprehensive Income, (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate under the Tax Cuts and Jobs Act. The amount of the reclassification would be the difference between the historical corporate income tax rate and the newly enacted 21 percent corporate income tax rate. ASU 2018-02 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2018 with early adoption in any interim period permitted. The Company adopted this ASU in the first quarter of 2018 and, as a result, reclassified $1.6 million of accumulated other comprehensive income to retained earnings. The amount of the reclassification is reported as “Reclassification of certain deferred tax effects” on the consolidated statements of comprehensive income and the consolidated statements of stockholders’ equity.

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, 2017, and interim periods within those annual periods, with early adoption permitted. The Company adopted ASU 2017-09 as of January 1, 2018. The adoption of ASU 2017-09 did not 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 adopted ASU 2017-05 as of January 1, 2018. The adoption of ASU 2017-05 did not have a material effect on the Company’s 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 adopted ASU 2017-01 as of January 1, 2018. The adoption of ASU 2017-01 did not have a material effect on the Company’s 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. The Company adopted ASU 2016-18 as of January 1, 2018. The adoption of ASU 2016-18 resulted in a $0.8 million increase in net cash used in investing activities and a $0.1 million increase in the effect of exchange rates on cash for the three months ended March 31, 2017.

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. The Company adopted ASU 2016-16 as of January 1, 2018. The adoption of ASU 2016-16 did not have a material effect on the Company’s consolidated financial statements.

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. The Company adopted ASU 2016-01 as of January 1, 2018. The adoption of ASU 2016-01 did not have a material effect on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification 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. The Company adopted this ASU under the modified-retrospective method effective January 1, 2018. The Company completed its 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 adoption of this ASU was not material to the Company’s 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 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.

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. Based on future expected earnings, the Company did not expect to pay any additional contingent consideration and recorded an adjustment to write-off the remaining liability in 2017. There was no change in fair value measurement of contingent consideration for the three months ended March 31, 2018.

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 months ended March 31, 2018 and 2017 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 March 31, 2018 and 2017 and December 31, 2017 were as follows (dollars in thousands):

	As of March 31, 2018
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	39,339		$	152,114		$	543,435		$	734,888
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			6,624			2,143			8,767
Receivables on non-accrual status		26,519			2,185			45,000			73,704
Total delinquent receivables		26,519			8,809			47,143			82,471
Total loans and finance receivables, gross		65,858			160,923			590,578			817,359
Less: Allowance for losses		(19,136	)		(27,120	)		(68,027	)		(114,283	)
Loans and finance receivables, net	$	46,722		$	133,803		$	522,551		$	703,076

	As of March 31, 2017
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	33,272		$	114,820		$	391,117		$	539,209
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			3,869			2,397			6,266
Receivables on non-accrual status		19,933			5,809			27,500			53,242
Total delinquent receivables		19,933			9,678			29,897			59,508
Total loans and finance receivables, gross		53,205			124,498			421,014			598,717
Less: Allowance for losses		(15,161	)		(21,765	)		(46,328	)		(83,254	)
Loans and finance receivables, net	$	38,044		$	102,733		$	374,686		$	515,463

	As of December 31, 2017
	Short-term			Line of Credit			Installment Loans and
	Loans			Accounts			RPAs			Total
Current receivables	$	45,552		$	161,070		$	537,634		$	744,256
Delinquent receivables:
Delinquent payment amounts⁽¹⁾		—			7,696			3,635			11,331
Receivables on non-accrual status		28,120			1,302			42,740			72,162
Total delinquent receivables		28,120			8,998			46,375			83,493
Total loans and finance receivables, gross		73,672			170,068			584,009			827,749
Less: Allowance for losses		(19,917	)		(31,148	)		(71,979	)		(123,044	)
Loans and finance receivables, net	$	53,755		$	138,920		$	512,030		$	704,705

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 months ended March 31, 2018 and 2017 were as follows (dollars in thousands):

	Three Months Ended March 31, 2018
	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	$	19,917		$	31,148		$	71,979		$	123,044
Cost of revenue		21,167			25,383			62,851			109,401
Charge-offs		(28,485	)		(32,807	)		(81,206	)		(142,498	)
Recoveries		6,272			3,396			14,125			23,793
Effect of foreign currency translation		265			—			278			543
Balance at end of period	$	19,136		$	27,120		$	68,027		$	114,283
Liability for third-party lender-owned loans:
Balance at beginning of period	$	2,105		$	—		$	153		$	2,258
Increase (decrease) in liability		(844	)		—			(4	)		(848	)
Balance at end of period	$	1,261		$	—		$	149		$	1,410

	Three Months Ended March 31, 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		16,274			19,831			46,588			82,693
Charge-offs		(24,379	)		(28,464	)		(65,322	)		(118,165	)
Recoveries		5,404			3,804			10,143			19,351
Effect of foreign currency translation		92			—			338			430
Balance at end of period	$	15,161		$	21,765		$	46,328		$	83,254
Liability for third-party lender-owned loans:
Balance at beginning of period	$	1,716		$	—		$	280		$	1,996
Increase (decrease) in liability		(672	)		—			(137	)		(809	)
Balance at end of period	$	1,044		$	—		$	143		$	1,187

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 March 31, 2018 and 2017 and December 31, 2017, the amount of consumer loans guaranteed by the Company was $26.6 million, $22.5 million and $34.1 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 $1.4 million, $1.2 million and $2.3 million, as of March 31, 2018 and 2017 and December 31, 2017, 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 March 31, 2018 and 2017 and December 31, 2017, 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 March 31, 2018, 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 March 31, 2018 and 2017 and December 31, 2017 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.

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 March 31, 2018 and December 31, 2017, the carrying amount of the 2024 Senior Notes was $243.1 million and $242.8 million, respectively, which includes unamortized issuance costs of $6.9 million and $7.2 million, respectively. The issuance costs are being amortized to interest expense over a period of seven years, through the maturity date of September 1, 2024. The total interest expense

recognized was $5.6 million of which $0.3 million represented the non-cash amortization of the issuance costs for the three months ended March 31, 2018.

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 by several of the Company’s subsidiaries 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 2016-1 Securitization Facility was amended on July 26, 2016, August 17, 2016, September 12, 2016, October 20, 2016, November 14, 2016 and December 14, 2016. The 2016-1 Securitization Facility, as amended, provided for a maximum principal amount of $275 million, variable funding notes maximum principal amount of $30 million per month and a revolving period of the facility ending in October 2017.

On October 20, 2017 (the “Amendment Closing Date”), 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 and that meet specified eligibility criteria. The eligible Receivables that were owned by the Issuer remained in the Amended Facility and the ineligible Receivables were removed. Under the Amended Facility, additional eligible Receivables may be sold to the Issuer and serviced by another subsidiary of the Company.

In connection with the amendment and restatement, all of the outstanding notes issued by the Issuer prior to the Amendment 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 were or 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, 2022 (the “2017 Final Maturity Date”).

The 2017 Securitization Notes are issued pursuant to an amended and restated indenture, dated as of the Amendment 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 25, 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 such notes for notes with an alternative structure with terms not materially different to the Issuer than the exchanged Term Notes or Initial Term Notes.

As of March 31, 2018 and 2017 and December 31, 2017, the carrying amount of the Amended Facility or 2016-1 Securitization Facility was $199.3 million, $131.9 million and $193.0 million, respectively, which included unamortized issuance costs of $2.6 million, $1.4 million and $3.3 million, respectively. The issuance costs related to the Amended Facility are being amortized to interest expense over a period of three years. The total interest expense recognized related to the 2016-1 Securitization facility and the Amended Facility was $5.1 million, of which $0.6 million represented the non-cash amortization of the issuance costs, and $3.9 million, of which $0.6 million represented the non-cash amortization of the issuance costs for the three months ended March 31, 2018 and 2017, 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 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 March 31, 2018 and 2017 and December 31, 2017, the carrying amount of the 2016‑2 Facility was $15.1 million, $12.1 million and $15.1 million, respectively. 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 March 31, 2018 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 $0.6 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively.

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 is $40 million and its maturity date is May 1, 2020. The Company had outstanding borrowings of $8.0 million under the 2017 Credit Agreement as of March 31, 2018. There were no outstanding borrowings under the 2017 Credit Agreement as of December 31, 2017.

The 2017 Credit Agreement provides for a revolving credit line with interest on borrowings under the facility at prime rate plus 1.00%. As of March 31, 2018 the interest rate on the outstanding balance was 5.75%. 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 each of March 31, 2018 and December 31, 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 $2.2 million, which primarily consisted of underwriting fees and legal expenses. The unamortized balance of these costs as of March 31, 2018 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 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 March 31, 2017.

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 $6.0 million as of March 31, 2017

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 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 March 31, 2018, the Company repurchased $50.0 million principal amount of the 2021 Senior Notes for aggregate cash consideration of $53.7 million plus accrued interest. In connection with these purchases, the Company recorded a loss on extinguishment of debt of approximately $4.7 million ($3.7 million net of tax), which is included in “Loss on early extinguishment of debt” in the consolidated statements of income.

As of March 31, 2018 and 2017 and December 31, 2017, the carrying amount of the 2021 Senior Notes was $289.1 million, $487.1 million and $337.6 million, respectively, which included an unamortized discount of $2.0 million, $4.2 million and $2.4 million, respectively, and unamortized issuance costs of $3.9 million, $8.7 million and $4.9 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 three months ended March 31, 2018 and 2017 was $7.9 million and $12.9 million, respectively, of which

$0.1 million and $0.2 million, respectively represented the non-cash amortization of the discount and $0.3 million and $0.5 million, respectively, represented the non-cash amortization of the issuance costs.

Weighted-average interest rates on long-term debt were 9.79% and 10.79% during the three months ended March 31, 2018 and 2017, respectively.

As of March 31, 2018 and 2017 and December 31, 2017, the Company was in compliance with all covenants and other requirements set forth in the prevailing long-term debt agreement(s).

The Company’s effective tax rate for the three months ended March 31, 2018, decreased to 20.8% from 34.3% for the three months ended March 31, 2017. The decrease was primarily attributable to the reduction of the U.S. federal statutory income tax rate to 21% from 35% resulting from the Tax Cuts and Jobs Act, which was enacted into law on December 22, 2017.

The following table sets forth the components of accumulated other comprehensive income (loss), net of tax for the three months ended March 31, 2018 and 2017 (in thousands):

	Foreign
	currency
	translation
	gain (loss)			Total
Balance at December 31, 2016	$	(11,578	)	$	(11,578	)
Other comprehensive loss, before reclassifications and tax		1,781			1,781
Tax impact		(643	)		(643	)
Balance at March 31, 2017	$	(10,440	)	$	(10,440	)

Balance at December 31, 2017	$	(7,086	)	$	(7,086	)
Other comprehensive loss, before reclassifications and tax		3,644			3,644
Tax impact		(820	)		(820	)
Australia and Canada liquidation ⁽¹⁾		2,343			2,343
Tax impact		(781	)		(781	)
Reclassification of certain deferred tax effects ⁽²⁾		(1,622	)		(1,622	)
Balance at March 31, 2018	$	(4,322	)	$	(4,322	)

Basic earnings per share is computed by dividing net 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 months ended March 31, 2018 and 2017 (in thousands, except per share amounts):

For the three months ended March 31, 2018 and 2017, 1,191,744 and 1,366,256 shares of common stock underlying stock options, respectively, and 296,058 and 821,756 shares of common stock underlying restricted stock units, respectively, were excluded from the calculation of diluted net 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 months ended March 31, 2018 and 2017 (dollars in thousands):

	Three Months Ended
	March 31,
	2018			2017
Revenue
Domestic	$	212,966		$	164,669
International		41,332			27,594
Total revenue	$	254,298		$	192,263

Income from operations
Domestic	$	87,759		$	62,070
International		1,718			2,194
Corporate services		(27,765	)		(26,192	)
Total income from operations	$	61,712		$	38,072

Depreciation and amortization
Domestic	$	1,858		$	1,526
International		372			379
Corporate services		1,608			1,592
Total depreciation and amortization	$	3,838		$	3,497

Expenditures for property and equipment
Domestic	$	1,990		$	611
International		1,068			1,085
Corporate services		291			460
Total expenditures for property and equipment	$	3,349		$	2,156

The following table presents the Company’s revenue by geographic region for the three months ended March 31, 2018 and 2017 (dollars in thousands):

The Company’s long-lived assets, which consist of the Company’s property and equipment, were $47.7 million and $44.3 million at March 31, 2018 and 2017, 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. On January 10, 2018, the Ninth Circuit filed an opinion affirming the district court's entry of summary judgment for us and the other defendants. The plaintiff had 90 days from the date of the opinion to petition the United States Supreme Court to review the matter and did not do so; the judgment in favor of the Company is now final.

On April 23, 2018, the Commonwealth of Virginia, through Attorney General Mark R. Herring, filed a lawsuit in the Circuit Court for the County of Fairfax, Virginia against NC Financial Solutions of Utah, LLC (“NC Utah”), a subsidiary of the Company. The lawsuit alleges violations of the Virginia Consumer Protection Act (“VCPA”) relating to NC Utah’s communications with customers, collections of certain payments, its loan agreements, and the rates it charged to Virginia borrowers. The plaintiff is seeking to enjoin NC Utah from continuing its current lending practices in Virginia, restitution, civil penalties, and costs and expenses in connection with the same. Neither the likelihood of an unfavorable 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 carefully considered applicable Virginia law before NC Utah began lending in Virginia and, as a result, 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 twelve months ended December 31, 2017 (in thousands):

The Company periodically uses 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 and Brazil. 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 March 31, 2018, 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 March 31, 2018 and 2017.

The following table presents information related to the Company’s derivative instruments as of December 31, 2017 (in thousands):

The following table presents information on the effect of derivative instruments on the consolidated results of operations and accumulated other comprehensive income (“AOCI”) for the three months ended March 31, 2018 and 2017 (dollars in thousands):

	Gains (Losses)								Gains (Losses)
	Recognized in				Gains (Losses)				Reclassified From
	Income				Recognized in AOCI				AOCI into Income
	Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				March 31,				March 31,
	2018		2017		2018		2017		2018		2017
Non-designated derivatives:
Forward currency exchange contracts⁽¹⁾	$	243	$	—	$	—	$	—	$	—	$	—
Total	$	243	$	—	$	—	$	—	$	—	$	—

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). 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 three months ended March 31, 2018 and 2017, the Company incurred interest expense of $32 thousand and $31 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 three months ended March 31, 2018 and 2017, the Company was paid $10 thousand and $7 thousand, respectively, for such services.

In October 2017, the Company entered into an agreement for direct mail production and fulfillment services with a marketing services company where David Fisher, the Company’s Chief Executive Officer and Chairman of the Board, also serves as a member of the marketing services company’s Board of Directors. During the three months ended March 31, 2018, the Company paid $2.1 million to the agency. As of March 31, 2018, the Company owed the agency $0.7 million related to services provided.

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):

	March 31,				December 31,
	2018		2017		2017
Assets
Restricted cash	$	26,746	$	17,815	$	21,696
Loans and finance receivables, net		278,272		207,594		259,996
Other receivables and prepaid expenses		1		3		—
Other assets		155		2,325		178
Total assets	$	305,174	$	227,737	$	281,870
Liabilities
Accounts payable and accrued expenses	$	1,677	$	1,223	$	1,671
Long-term debt		214,459		144,030		208,135
Total liabilities	$	216,136	$	145,253	$	209,806

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 three months ended March 31, 2018 and 2017, 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 March 31, 2018 and 2017 and December 31, 2017 are as follows (dollars in thousands):

	March 31,			Fair Value Measurements Using
	2018			Level 1		Level 2			Level 3
Financial assets (liabilities):
Non-qualified savings plan assets⁽¹⁾	$	2,079		$	2,079	$	—		$	—
Total	$	2,079		$	2,079	$	—		$	—

	March 31,			Fair Value Measurements Using
	2017			Level 1		Level 2			Level 3
Financial assets (liabilities):
Non-qualified savings plan assets⁽¹⁾	$	1,352		$	1,352	$	—		$	—
Contingent consideration		(2,358	)		—		—			(2,358	)
Total	$	(1,006	)	$	1,352	$	—		$	(2,358	)

	December 31,			Fair Value Measurements Using
	2017			Level 1		Level 2			Level 3
Financial assets (liabilities):
Forward currency exchange contracts	$	(55	)	$	—	$	(55	)	$	—
Non-qualified savings plan assets⁽¹⁾		1,460			1,460		—			—
Total	$	1,405		$	1,460	$	(55	)	$	—

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. Based on future expected earnings, the Company did not expect to pay any additional contingent consideration and recorded an adjustment to write-off the remaining liability in 2017. There was no change in fair value measurement of contingent consideration for the three months ended March 31, 2018.

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 table below for the three months ended March 31, 2017 (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 March 31, 2018 and 2017 and December 31, 2017, there were no assets or liabilities recorded at fair value on a non-recurring basis.

The Company’s financial assets and liabilities as of March 31, 2018 and 2017 and December 31, 2017 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):

	Balance at
	March 31,		Fair Value Measurements Using
	2018		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	69,900	$	69,900	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		180,525		—		—		180,525
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		522,551		—		—		551,001
Restricted cash ⁽⁵⁾		34,765		34,765		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	814,444	$	104,665	$	—	$	738,229
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	1,410	$	—	$	—	$	1,410
Promissory note		3,000		—		—		3,327
Revolving line of credit		8,000		—		—		8,000
Securitization Notes		217,125		—		220,066		—
9.75% senior notes due 2021		293,044		—		306,260		—
8.50% senior notes due 2024		250,000		—		261,250		—
Total	$	772,579	$	—	$	787,576	$	12,737

	Balance at
	March 31,		Fair Value Measurements Using
	2017		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	97,030	$	97,030	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		140,777		—		—		140,777
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		374,686		—		—		409,169
Restricted cash ⁽⁵⁾		25,610		25,610		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	644,806	$	122,640	$	—	$	556,649
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	1,187	$	—	$	—	$	1,187
Promissory note		3,000		—		—		3,149
Securitization Notes		145,449		—		147,855		—
9.75% senior notes due 2021		495,824		—		512,125		—
Total	$	645,460	$	—	$	659,980	$	4,336

	Balance at
	December 31,		Fair Value Measurements Using
	2017		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	68,684	$	68,684	$	—	$	—
Short-term loans and line of credit accounts, net ⁽¹⁾		192,675		—		—		192,675
Installment loans and RPAs, net ⁽¹⁾⁽⁴⁾		512,030		—		—		544,799
Restricted cash ⁽⁵⁾		29,460		29,460		—		—
Investment in unconsolidated investee⁽²⁾⁽³⁾		6,703		—		—		6,703
Total	$	809,552	$	98,144	$	—	$	744,177
Financial liabilities:
Liability for estimated losses on consumer loans guaranteed by the Company	$	2,258	$	—	$	—	$	2,258
Promissory note		3,000		—		—		3,287
Securitization Notes		211,406		—		215,063		—
9.75% senior notes due 2021		342,558		—		365,700		—
8.50% senior notes due 2024		250,000		—		255,000		—
Total	$	809,222	$	—	$	835,763	$	5,545

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 cash and cash equivalents and restricted cash 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 March 31, 2018 and 2017 and December 31, 2017, 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 March 31, 2018 and 2017 and December 31, 2017 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 $1.4 million, $1.2 million and $2.3 million as of March 31, 2018 and 2017 and December 31, 2017, 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 March 31, 2018 and 2017 and December 31, 2017, the Promissory Note had a higher fair value than the carrying value.

The Company measures the fair value of its Revolving line of credit borrowings using Level 3 inputs. The Company considered the fair value of its other long-term debt and the timing of expected payment(s). As of March 31, 2018, the fair value of the Company’s Revolving line of credit borrowings approximated 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 March 31, 2018 and 2017 and December 31, 2017, 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 March 31, 2018 and 2017 and December 31, 2017, the Company’s 9.75% senior notes due 2021 had a higher fair value 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 March 31, 2018 the Company’s 8.50% senior notes due 2024 had a higher fair value than the carrying value.

The Company’s 2021 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 March 31, 2018 and 2017 and December 31, 2017 and for the periods ended March 31, 2018 and 2017 are shown on the following pages.

				Guarantor		Non-Guarantor
	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	11,016		$	58,086	$	798		$	—		$	69,900
Restricted cash		—			8,019		26,746			—			34,765
Loans and finance receivables, net		—			424,776		278,300			—			703,076
Other receivables and prepaid expenses		110			20,631		1,423			—			22,164
Property and equipment, net		—			47,175		523			—			47,698
Goodwill		—			267,013		—			—			267,013
Intangible assets, net		—			4,058		—			—			4,058
Investment in subsidiaries		432,019			51,911		—			(483,930	)		—
Intercompany receivable		303,868			—		—			(303,868	)		—
Other assets		1,600			7,771		155			—			9,526
Total assets	$	748,613		$	889,440	$	307,945		$	(787,798	)	$	1,158,200
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	11,569		$	56,472	$	2,432		$	—		$	70,473
Intercompany payables		—			256,757		47,111			(303,868	)		—
Income taxes currently payable		(118,763	)		119,055		(35	)		—			257
Deferred tax liabilities, net		(116	)		17,681		(478	)		—			17,087
Long-term debt		540,190			—		214,460			—			754,650
Total liabilities		432,880			449,965		263,490			(303,868	)		842,467
Commitments and contingencies
Stockholders' equity		315,733			439,475		44,455			(483,930	)		315,733
Total liabilities and stockholders' equity	$	748,613		$	889,440	$	307,945		$	(787,798	)	$	1,158,200

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—		$	92,568		$	4,462		$	—		$	97,030
Restricted cash		—			7,795			17,815			—			25,610
Loans and finance receivables, net		—			303,000			212,463			—			515,463
Income taxes receivable		77,477			(74,481	)		8			—			3,004
Other receivables and prepaid expenses		115			17,550			394			—			18,059
Property and equipment, net		—			43,598			681			—			44,279
Goodwill		—			267,011			—			—			267,011
Intangible assets, net		—			5,133			3			—			5,136
Investment in subsidiaries		318,664			30,693			—			(349,357	)		—
Intercompany receivable		364,990			—			—			(364,990	)		—
Other assets		299			7,197			2,325			—			9,821
Total assets	$	761,545		$	700,064		$	238,151		$	(714,347	)	$	985,413
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	16,351		$	52,457		$	1,677		$	—		$	70,485
Intercompany payables		—			295,960			69,030			(364,990	)		—
Income taxes currently payable		—			—			—			—			—
Deferred tax liabilities, net		(366	)		26,210			(506	)		—			25,338
Long-term debt		487,087			—			144,030			—			631,117
Total liabilities		503,072			374,627			214,231			(364,990	)		726,940
Commitments and contingencies
Stockholders' equity		258,473			325,437			23,920			(349,357	)		258,473
Total liabilities and stockholders' equity	$	761,545		$	700,064		$	238,151		$	(714,347	)	$	985,413

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	12,183		$	54,659		$	1,842		$	—		$	68,684
Restricted cash		—			7,764			21,696			—			29,460
Loans and finance receivables, net		—			442,516			262,189			—			704,705
Income taxes receivable		114,494			(110,852	)		450			—			4,092
Other receivables and prepaid expenses		833			20,731			2,253			—			23,817
Property and equipment, net		—			47,965			560			—			48,525
Goodwill		—			267,015			—			—			267,015
Intangible assets, net		—			4,325			—			—			4,325
Investment in subsidiaries		388,538			63,956			—			(452,494	)		—
Intercompany receivable		354,457			—			—			(354,457	)		—
Other assets		1,785			6,874			178			—			8,837
Total assets	$	872,290		$	804,953		$	289,168		$	(806,951	)	$	1,159,460
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	10,336		$	64,541		$	2,246		$	—		$	77,123
Intercompany payables		—			331,425			23,032			(354,457	)		—
Deferred tax liabilities, net		(140	)		12,726			(478	)		—			12,108
Long-term debt		580,407			—			208,135			—			788,542
Total liabilities		590,603			408,692			232,935			(354,457	)		877,773
Commitments and contingencies
Stockholders' equity		281,687			396,261			56,233			(452,494	)		281,687
Total liabilities and stockholders' equity	$	872,290		$	804,953		$	289,168		$	(806,951	)	$	1,159,460

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	214,734		$	41,276		$	(1,712	)	$	254,298
Cost of Revenue		—			83,229			25,324			—			108,553
Gross Profit		—			131,505			15,952			(1,712	)		145,745
Expenses
Marketing		—			26,977			759			—			27,736
Operations and technology		3			24,350			2,897			(1,712	)		25,538
General and administrative		76			25,480			1,365			—			26,921
Depreciation and amortization		—			3,794			44			—			3,838
Total Expenses		79			80,601			5,065			(1,712	)		84,033
(Loss) Income from Operations		(79	)		50,904			10,887			—			61,712
Interest expense, net		(13,944	)		(448	)		(5,281	)		—			(19,673	)
Foreign currency transaction gain		255			(2,343	)		—			—			(2,088	)
Loss on early extinguishment of debt		(4,710	)		—			—			—			(4,710	)
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(18,478	)		48,113			5,606			—			35,241
(Benefit from) provision for income taxes		(3,850	)		10,025			1,168			—			7,343
(Loss) Income before Equity in Net Earnings of Subsidiaries		(14,628	)		38,088			4,438			—			27,898
Net earnings of subsidiaries		42,526			4,438			—			(46,964	)		—
Net Income (Loss)	$	27,898		$	42,526		$	4,438		$	(46,964	)	$	27,898
Other comprehensive gain (loss), net of tax:
Foreign currency translation gain (loss)		4,386			2,497			267			(2,764	)		4,386
Reclassification of certain deferred tax effects		(1,622	)		—			—			—			(1,622	)
Total other comprehensive gain (loss), net of tax		2,764			2,497			267			(2,764	)		2,764
Comprehensive Income (Loss)	$	30,662		$	45,023		$	4,705		$	(49,728	)	$	30,662

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	160,767		$	32,784		$	(1,288	)	$	192,263
Cost of Revenue		—			59,415			22,469			—			81,884
Gross Profit		—			101,352			10,315			(1,288	)		110,379
Expenses
Marketing		—			19,373			210			—			19,583
Operations and technology		—			21,942			1,589			—			23,531
General and administrative		48			24,859			2,077			(1,288	)		25,696
Depreciation and amortization		—			3,455			42			—			3,497
Total Expenses		48			69,629			3,918			(1,288	)		72,307
(Loss) Income from Operations		(48	)		31,723			6,397			—			38,072
Interest expense, net		(13,177	)		(35	)		(4,010	)		—			(17,222	)
Foreign currency transaction gain		227			—			—			—			227
(Loss) Income before Income Taxes and Equity in Net Earnings of Subsidiaries		(12,998	)		31,688			2,387			—			21,077
Provision for income taxes		(4,456	)		10,863			818			—			7,225
(Loss) Income before Equity in Net Earnings of Subsidiaries		(8,542	)		20,825			1,569			—			13,852
Net earnings of subsidiaries		22,394			1,569			—			(23,963	)		—
Net Income (Loss)	$	13,852		$	22,394		$	1,569		$	(23,963	)	$	13,852
Other comprehensive gain (loss), net of tax:
Foreign currency translation gain (loss)		1,138			510			628			(1,138	)		1,138
Total other comprehensive gain (loss), net of tax		1,138			510			628			(1,138	)		1,138
Comprehensive Income (Loss)	$	14,990		$	22,904		$	2,197		$	(25,101	)	$	14,990

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities	$	45,160		$	97,070		$	15,210		$	(4,438	)	$	153,002
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		—			(378,099	)		—			—			(378,099	)
Securitized loans transferred		—			82,156			(82,156	)		—			—
Loans and finance receivables repaid		—			188,235			81,783			—			270,018
Purchases of property and equipment		—			(3,344	)		(5	)		—			(3,349	)
Capital contributions to subsidiaries		—			16,483			—			(16,483	)		—
Other investing activities		—			24			—			—			24
Net cash used in investing activities		—			(94,545	)		(378	)		(16,483	)		(111,406	)
Cash Flows from Financing Activities
(Payments for) proceeds from member's equity		—			(4,438	)		(16,483	)		20,921			—
Debt prepayment penalty		(3,656	)		—			—			—			(3,656	)
Treasury shares purchased		(1,128	)		—			—			—			(1,128	)
Repayments of Senior Notes		(50,000	)		—			—			—			(50,000	)
Borrowings under revolving line of credit		32,000			—			—			—			32,000
Repayments under revolving line of credit		(24,000	)		—			—			—			(24,000	)
Borrowings under securitization facility		—			—			55,300			—			55,300
Repayments under securitization facility		—			—			(49,581	)		—			(49,581	)
Proceeds from exercise of stock options		457			—			—			—			457
Net cash (used in) provided by financing activities		(46,327	)		(4,438	)		(10,764	)		20,921			(40,608	)
Effect of exchange rates on cash, cash equivalents and restricted cash		—			5,595			(62	)		—			5,533
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,167	)		3,682			4,006			—			6,521
Cash, cash equivalents and restricted cash at beginning of year		12,183			62,423			23,538			—			98,144
Cash, cash equivalents and restricted cash at end of period	$	11,016		$	66,105		$	27,544		$	—		$	104,665

				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities	$	536		$	130,885		$	(7,494	)	$	(4,062	)	$	119,865
Cash Flows from Investing Activities
Loans and finance receivables originated or acquired		—			(268,245	)		(5,745	)		—			(273,990	)
Securitized loans transferred		—			37,081			(37,081	)		—			—
Loans and finance receivables repaid		—			160,523			67,665			—			228,188
Purchases of property and equipment		—			(2,053	)		(103	)		—			(2,156	)
Capital contributions to subsidiaries		—			(1,500	)		—			1,500			—
Other investing activities		—			2,367			—			—			2,367
Net cash (used in) provided by investing activities		—			(71,827	)		24,736			1,500			(45,591	)
Cash Flows from Financing Activities
(Payments for) proceeds from member's equity		—			(4,062	)		1,500			2,562			—
Treasury shares purchased		(536	)		—			—			—			(536	)
Borrowings under securitization facility		—			—			22,700			—			22,700
Repayments under securitization facility		—			—			(42,670	)		—			(42,670	)
Net cash (used in) provided by financing activities		(536	)		(4,062	)		(18,470	)		2,562			(20,506	)
Effect of exchange rates on cash, cash equivalents and restricted cash		—			2,632			—			—			2,632
Net increase in cash, cash equivalents and restricted cash		—			57,628			(1,228	)		—			56,400
Cash, cash equivalents and restricted cash at beginning of year		—			42,895			23,345			—			66,240
Cash, cash equivalents and restricted cash at end of period	$	—		$	100,523		$	22,117		$	—		$	122,640

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

On April 13, 2018, the Company and certain of its operating subsidiaries entered into an amendment of its 2017 Credit Agreement (the "Amended Credit Agreement"). The Amended Credit Agreement, amongst other changes, increases the borrowing limit to $75 million from $40 million in the 2017 Credit Agreement. In addition, Pacific Western Bank, as Lender in the Amended Credit Agreement, joins the syndicate of lenders from the 2017 Credit Agreement. The maturity date of May 1, 2020, and the interest rate on borrowings of prime rate plus 1.00% remain the same as the 2017 Credit Agreement.

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, 2017. 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 2017, we extended approximately $2.1 billion in credit to borrowers. As of March 31, 2018, we offered or arranged loans or draws on lines of credit to consumers in 32 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 March 31, 2018, we have completed over 44.1 million customer transactions and collected more than 22 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 2017, we processed approximately 3.9 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 lend to borrowers through a local Brazilian financing structure. 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 three-month period ended March 31, 2018, we derived 83.7% of our total revenue from the United States and 16.3% of our total revenue internationally, with 84.7% 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 March 31, 2018 and 2017, the outstanding amount of active short-term consumer loans originated by third-party lenders under the CSO programs was $21.4 million and $18.9 million, respectively, which were guaranteed by us.

As of March 31, 2018 and 2017, the outstanding amount of active installment loans originated by third-party lenders under the CSO programs was $5.2 million and $3.7 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.

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, 2017.

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 March 31, 2018, 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 March 31,
	2018			2017
Revenue
Loans and finance receivables revenue	$	253,792		$	191,965
Other		506			298
Total Revenue		254,298			192,263
Cost of Revenue		108,553			81,884
Gross Profit		145,745			110,379
Expenses
Marketing		27,736			19,583
Operations and technology		25,538			23,531
General and administrative		26,921			25,696
Depreciation and amortization		3,838			3,497
Total Expenses		84,033			72,307
Income from Operations		61,712			38,072
Interest expense, net		(19,673	)		(17,222	)
Foreign currency transaction gain		(2,088	)		227
Loss on early extinguishment of debt		(4,710	)		—
Income before Income Taxes		35,241			21,077
Provision for income taxes		7,343			7,225
Net Income	$	27,898		$	13,852
Diluted net income per share	$	0.81		$	0.41

Revenue
Loans and finance receivables revenue		99.8	%		99.8	%
Other		0.2			0.2
Total Revenue		100.0			100.0
Cost of Revenue		42.7			42.6
Gross Profit		57.3			57.4
Expenses
Marketing		10.9			10.2
Operations and technology		10.0			12.2
General and administrative		10.6			13.4
Depreciation and amortization		1.5			1.8
Total Expenses		33.0			37.6
Income from Operations		24.3			19.8
Interest expense, net		(7.7	)		(8.9	)
Foreign currency transaction gain		(0.8	)		0.1
Loss on early extinguishment of debt		(1.9	)		—
Income before Income Taxes		13.9			11.0
Provision for income taxes		2.9			3.8
Net Income		11.0	%		7.2	%

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 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
	March 31,
	2018			2017
Net Income	$	27,898		$	13,852
Adjustments:
Loss on early extinguishment of debt		4,710			—
Intangible asset amortization		267			271
Stock-based compensation expense		2,433			2,320
Foreign currency transaction loss (gain)		2,088			(227	)
Cumulative tax effect of adjustments		(1,979	)		(810	)
Adjusted earnings	$	35,417		$	15,406

Diluted net income per share	$	0.81		$	0.41
Adjustments:
Loss on early extinguishment of debt		0.13			—
Intangible asset amortization		0.01			0.01
Stock-based compensation expense		0.07			0.07
Foreign currency transaction loss (gain)		0.06			(0.01	)
Cumulative tax effect of adjustments		(0.06	)		(0.03	)
Adjusted earnings per share	$	1.02		$	0.45

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
	March 31,
	2018			2017
Net Income	$	27,898		$	13,852
Depreciation and amortization expenses		3,838			3,497
Interest expense, net		19,673			17,222
Foreign currency transaction loss (gain)		2,088			(227	)
Provision for income taxes		7,343			7,225
Stock-based compensation expense		2,433			2,320
Adjustment:
Loss on early extinguishment of debt		4,710			—
Adjusted EBITDA	$	67,983		$	43,889

Adjusted EBITDA margin calculated as follows:
Total Revenue	$	254,298		$	192,263
Adjusted EBITDA		67,983			43,889
Adjusted EBITDA as a percentage of total revenue		26.7	%		22.8	%

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 16.3% 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.

Revenue increased $62.0 million, or 32.3%, to $254.3 million for the current quarter as compared to $192.3 million for the prior year quarter. On a constant currency basis, revenue increased by $58.4 million, or 30.4%, for the current quarter compared to the prior year quarter. Our domestic operations contributed an increase of $48.3 million, primarily resulting from a 39.7% increase in installment loan and RPA revenue and a 31.9% increase in line of credit account 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 $13.7 million (an increase of $10.1 million on a constant currency basis), primarily resulting from a 65.7% increase in installment loan and RPA revenue and a 35.9% increase in short-term loan revenue.

Our gross profit increased by $35.3 million to $145.7 million for the current quarter from $110.4 million for the prior year quarter. On a constant currency basis, gross profit increased by $33.4 million for the current quarter compared to the prior year quarter. Our consolidated gross profit as a percentage of revenue, or our gross profit margin, decreased only slightly to 57.3% for the current quarter, from 57.4% for the prior year quarter.

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 March 31,
	2018			2017			$ Change		% Change
Revenue by product:
Short-term loans	$	53,375		$	47,423		$	5,952		12.6	%
Line of credit accounts		78,309			59,459			18,850		31.7
Installment loans and RPAs		122,108			85,083			37,025		43.5
Total loans and finance receivables revenue		253,792			191,965			61,827		32.2
Other		506			298			208		69.8
Total revenue	$	254,298		$	192,263		$	62,035		32.3	%

Revenue by product (% to total):
Short-term loans		21.0	%		24.7	%
Line of credit accounts		30.8			30.9
Installment loans and RPAs		48.0			44.2
Total loans and finance receivables revenue		99.8			99.8
Other		0.2			0.2
Total revenue		100.0	%		100.0	%

	Three Months Ended March 31,
	2018			2017			$ Change			% Change
Domestic:
Revenue	$	212,966		$	164,669		$	48,297			29.3	%
Cost of revenue		88,113			70,649			17,464			24.7
Gross profit	$	124,853		$	94,020		$	30,833			32.8
Gross profit margin		58.6	%		57.1	%		1.5	%		2.6	%
International:
Revenue	$	41,332		$	27,594		$	13,738			49.8	%
Cost of revenue		20,440			11,235			9,205			81.9
Gross profit	$	20,892		$	16,359		$	4,533			27.7
Gross profit margin		50.5	%		59.3	%		(8.8	)%		(14.8	)%
Total:
Revenue	$	254,298		$	192,263		$	62,035			32.3	%
Cost of revenue		108,553			81,884			26,669			32.6
Gross profit	$	145,745		$	110,379		$	35,366			32.0
Gross profit margin		57.3	%		57.4	%		(0.1	)%		(0.2	)%

Our loan and finance receivable balance in our consolidated financial statements for March 31, 2018 and 2017 was $817.4 million and $598.7 million, respectively, before the allowance for losses of $114.3 million and $83.3 million, respectively. The combined loan and finance receivable balance includes $26.6 million and $22.5 million as of March 31, 2018 and 2017, 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 March 31, 2018 and 2017, respectively, before the liability for estimated losses of $1.4 million and $1.2 million provided in “Accounts payable and accrued expenses” in our consolidated financial statements for March 31, 2018 and 2017, respectively.

The ending portfolio balance of loans and finance receivables, net of allowance for losses, increased $187.6 million, or 36.4%, to $703.1 million as of March 31, 2018 from $515.5 million as of March 31, 2017, and the outstanding combined portfolio balance of loans and finance receivables, net of allowance and liability for estimated losses, increased $191.4 million, or 35.7%, to $728.3 million as of March 31, 2018 from $536.8 million as of March 31, 2017, 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 41.1% in the current quarter compared to the prior year quarter resulting in a domestic near-prime portfolio balance that comprises 44.6% of our total loan and finance receivable portfolio balance while short-term loans comprised approximately 10.3% of our total loan and finance receivable portfolio balance in the current quarter, compared to 11.6% 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 to 9.3% in the current quarter from 13.3% in the prior year quarter due to a 5.2% decrease in the small business loan and finance receivables balance and strong growth in our consumer products. 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 March 31, 2018 and 2017 (in thousands):

	As of March 31,
	2018									2017
				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	$	65,858		$	21,409		$	87,267		$	53,205		$	18,854		$	72,059
Line of credit accounts		160,923			—			160,923			124,498			—			124,498
Installment loans and RPAs		590,578			5,185			595,763			421,014			3,692			424,706
Total ending loans and finance receivables, gross		817,359			26,594			843,953			598,717			22,546			621,263
Less: Allowance and liabilities for losses^(a)		(114,283	)		(1,410	)		(115,693	)		(83,254	)		(1,187	)		(84,441	)
Total ending loans and finance receivables, net	$	703,076		$	25,184		$	728,260		$	515,463		$	21,359		$	536,822
Allowance and liability for losses as a % of loans and finance receivables, gross		14.0	%		5.3	%		13.7	%		13.9	%		5.3	%		13.6	%

	As of March 31,
	2018						2017
			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	$	702,818	$	26,594	$	729,412	$	520,615	$	22,546	$	543,161
Total international, gross		114,541		—		114,541		78,102		—		78,102
Total ending loans and finance receivables, gross	$	817,359	$	26,594	$	843,953	$	598,717	$	22,546	$	621,263

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 March 31, 2018 and 2017:

The average amount outstanding per loan increased to $1,412 from $1,256 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 $569 from $481 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. Additionally, each of our products saw an increase in the average origination amount resulting from higher origination amounts to new customers.

The allowance and liability for estimated losses as a percentage of combined loans and RPAs increased only slightly to 13.7% as of March 31, 2018 from 13.6% as of March 31, 2017.

The cost of revenue in the current quarter was $108.6 million, which was composed of $109.4 million related to Company-owned loans and finance receivables offset by a $0.8 million decrease 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 $81.9 million, which was composed of $82.7 million related to Company-owned loans and finance receivables offset by a $0.8 million decrease in the liability for estimated losses related

to loans we guaranteed through the CSO programs. Total charge-offs, net of recoveries, were $118.7 million and $98.8 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):

	2017												2018
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Loans and finance receivables:
Gross - Company owned	$	598,717		$	647,835		$	742,796		$	827,749		$	817,359
Gross - Guaranteed by the Company^(a)		22,546			28,013			28,943			34,134			26,594
Combined loans and finance receivables, gross^(b)		621,263			675,848			771,739			861,883			843,953
Allowance and liability for losses on loans and finance receivables		84,441			85,780			107,077			125,302			115,693
Combined loans and finance receivables, net^(b)	$	536,822		$	590,068		$	664,662		$	736,581		$	728,260
Allowance and liability for losses as a % of loans and finance receivables, gross^(b)		13.6	%		12.7	%		13.9	%		14.5	%		13.7	%

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 was 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):

	2017												2018
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Short-term loans:
Cost of revenue	$	15,602		$	16,584		$	23,849		$	22,129		$	20,323
Charge-offs (net of recoveries)		18,975			15,539			20,439			21,201			22,213
Average short-term combined loan balance, gross:
Company owned^(a)		58,729			57,653			65,949			70,040			71,442
Guaranteed by the Company^(a)(b)		23,153			21,368			25,787			26,785			26,383
Average short-term combined loan balance, gross^(a)(c)	$	81,882		$	79,021		$	91,736		$	96,825		$	97,825
Ending short-term combined loan balance, gross:
Company owned	$	53,205		$	61,565		$	67,719		$	73,672		$	65,858
Guaranteed by the Company^(b)		18,854			24,123			24,248			28,875			21,409
Ending short-term combined loan balance, gross^(c)	$	72,059		$	85,688		$	91,967		$	102,547		$	87,267
Ending allowance and liability for losses	$	16,205		$	17,449		$	21,047		$	22,022		$	20,397

Short-term loan ratios:
Cost of revenue as a % of average short-term combined loan balance, gross^(a)(c)		19.1	%		21.0	%		26.0	%		22.9	%		20.8	%
Charge-offs (net of recoveries) as a % of average short-term combined loan balance, gross^(a)(c)		23.2	%		19.7	%		22.3	%		21.9	%		22.7	%
Gross profit margin		67.1	%		64.5	%		52.2	%		58.5	%		61.9	%
Allowance and liability for losses as a % of combined loan balance, gross^(c)(d)		22.5	%		20.4	%		22.9	%		21.5	%		23.4	%

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):

	2017												2018
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Line of credit accounts:
Cost of revenue	$	19,831		$	19,868		$	23,439		$	30,278		$	25,383
Charge-offs (net of recoveries)		24,660			18,786			19,476			25,940			29,411
Average loan balance^(a)		135,621			128,348			145,398			161,905			168,118
Ending loan balance		124,498			134,154			154,689			170,068			160,923
Ending allowance for losses balance	$	21,765		$	22,847		$	26,810		$	31,148		$	27,120

Line of credit account ratios:
Cost of revenue as a % of average loan balance^(a)		14.6	%		15.5	%		16.1	%		18.7	%		15.1	%
Charge-offs (net of recoveries) as a % of average loan balance^(a)		18.2	%		14.6	%		13.4	%		16.0	%		17.5	%
Gross profit margin		66.6	%		66.2	%		66.0	%		59.9	%		67.6	%
Allowance for losses as a % of loan balance^(b)		17.5	%		17.0	%		17.3	%		18.3	%		16.9	%

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 March 31, 2018 increased 34.0% in the current quarter compared to the prior year quarter.

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):

	2017												2018
	First			Second			Third			Fourth			First
	Quarter			Quarter			Quarter			Quarter			Quarter
Installment loans and RPAs:
Cost of revenue	$	46,451		$	43,410		$	60,053		$	75,138		$	62,847
Charge-offs (net of recoveries)		55,179			44,443			46,598			62,116			67,081
Average installment and RPA combined loan and finance receivable balance, gross:
Company owned^(a)		440,886			433,698			487,436			552,003			591,739
Guaranteed by the Company^(a)(b)		4,874			3,631			4,628			5,025			5,760
Average installment and RPA combined loan and finance receivable balance, gross^(a)(c)	$	445,760		$	437,329		$	492,064		$	557,028		$	597,499
Ending installment and RPA combined loan and finance receivable balance, gross:
Company owned	$	421,014		$	452,116		$	520,388		$	584,009		$	590,578
Guaranteed by the Company^(b)		3,692			3,890			4,695			5,259			5,185
Ending installment and RPA combined loan and finance receivable balance, gross ^(c)	$	424,706		$	456,006		$	525,083		$	589,268		$	595,763
Ending allowance and liability for losses	$	46,471		$	45,484		$	59,220		$	72,132		$	68,176

Installment and RPA loan ratios:
Cost of revenue as a % of average installment and RPA combined loan and finance receivable balance, gross^(a)(c)		10.4	%		9.9	%		12.2	%		13.5	%		10.5	%
Charge-offs (net of recoveries) as a % of average installment and RPA combined loan and finance receivable balance, gross^(a)(c)		12.4	%		10.2	%		9.5	%		11.2	%		11.2	%
Gross profit margin		45.4	%		48.4	%		39.3	%		34.4	%		48.5	%
Allowance and liability for losses as a % of combined loan and finance receivable balance, gross^(c)(d)		10.9	%		10.0	%		11.3	%		12.2	%		11.4	%

Total expenses increased $11.7 million, or 16.2%, to $84.0 million in the current quarter, compared to $72.3 million in the prior year quarter. On a constant currency basis, total expenses increased $10.6 million, or 14.6%, to $82.9 million for the current quarter compared to the prior year quarter.

Marketing expense increased to $27.8 million in the current quarter compared to $19.6 million in the prior year quarter. The increase was primarily due to higher direct mail costs related to our domestic products, volume from lead providers in both our domestic and international businesses and domestic television advertising.

Operations and technology expense increased to $25.5 million in the current quarter compared to $23.5 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 $1.2 million, or 4.8%, to $26.9 million in the current quarter compared to $25.7 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 increased $0.3 million, or 9.8%, in the current quarter compared to the prior year quarter, primarily due to increased capitalized development software costs to support our growth.

Interest expense, net increased $2.5 million, or 14.2%, to $19.7 million in the current quarter compared to $17.2 million in the prior year quarter. The increase was primarily due to an increase in the average amount of debt outstanding, which increased $130.2 million to $768.6 million during the current quarter from $638.4 million during the prior year quarter, partially offset by a decrease in the weighted average interest rate on our outstanding debt to 9.79% during the current quarter from 10.79% during the prior year quarter.

Provision for income taxes increased $0.1 million, or 1.6%, to $7.3 million in the current quarter compared to $7.2 million in the prior year quarter. The decrease was primarily due to a 67.2% increase in income before income taxes offset by a decrease in effective tax rate to 20.8% in the current quarter from 34.3% in the prior year quarter. The decrease in the effective tax rate is mainly due to the Tax Cuts and Jobs Act, and an adjustment related to share based compensation deferred tax benefits.

As of March 31, 2018, the balance of unrecognized tax benefits was $812 thousand ($758 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 $384 thousand ($352 thousand net of the federal benefit of state matters) of unrecognized tax benefits as of March 31, 2017. 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 2016 and 2015 tax years are 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 years from the date the tax return is filed.

Net income increased $14.0 million, or 101.4%, to $27.9 million during the current quarter compared to $13.9 million during the prior year quarter. The increase was primarily due to higher gross profit, driven by higher revenue, and lower operating expenses as a percentage of revenue in the current quarter compared to the prior year quarter.

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 January 21, 2018 we redeemed an additional $50.0 million in principal amount of the outstanding 2021 Senior Notes. On June 30, 2017, we entered into a 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. On April 13, 2018, we and certain of our operating subsidiaries entered into an amendment of our 2017 Credit Agreement (the "Amended Credit Agreement"). As of April 30, 2018, our available borrowings under the Amended Credit Agreement were $17.0 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 April 30, 2018, the outstanding balance under our securitization facilities was $201.3 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 March 31, 2018, 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. The 2016-1 Securitization Facility was amended on July 26, 2016, August 17, 2016, September 12, 2016, October 20, 2016, November 14, 2016 and December 14, 2016. The 2016-1 Securitization Facility, as amended, provided for a maximum principal amount of $275 million, variable funding notes maximum principal amount of $30 million per month and a revolving period of the facility ending in October 2017.

On October 20, 2017 (the “Amendment Closing Date”), 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 several of our subsidiaries and that meet specified eligibility criteria. The eligible Receivables that were owned by the Issuer remained in the Amended Facility and the ineligible Receivables were removed. Under the Amended Facility, additional eligible Receivables may be sold to the Issuer and serviced by another subsidiary of ours.

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 were or 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 us and mature at various dates, the latest of which will be April 15, 2022 (the “2017 Final Maturity Date”).

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 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 June 30, 2017, we and certain of our operating subsidiaries entered into a 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. 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 $8.0 million of outstanding borrowings under the 2017 Credit Agreement as of March 31, 2018.

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 March 31, 2018. 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 April 13, 2018, we and certain of our operating subsidiaries entered into an amendment of our 2017 Credit Agreement. The Amended Credit Agreement, amongst other changes, increases the borrowing limit to $75 million from $40 million in the 2017 Credit Agreement. The maturity date of May 1, 2020, and the interest rate on borrowings of prime rate plus 1.00% remain the same as the 2017 Credit Agreement. In addition, Pacific Western Bank, as Lender in the Amended Credit Agreement, joins the syndicate of lenders from the 2017 Credit Agreement.

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

Net cash provided by operating activities increased $33.1 million, or 27.6%, to $153.0 million for the current three-month period from $119.9 million for the prior year three-month period. The increase was primarily driven by a $26.7 million increase in cost of revenue, a non-cash expense, during the current three-month period, and a $14.0 million increase in net income.

Other significant changes in net cash provided by operating activities for the current three-month period compared to the prior year three-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 increased $65.8 million, or 144.4%, for the current three-month period compared to the prior year three-month period. This increase was primarily due to a $62.3 million increase in net cash invested in loans and finance receivables, reflecting a $104.1 million increase in the amount of loans and finance receivables originated or acquired partially offset by an $41.8 million increase payments received from customers. Additionally, purchases of property and equipment increased $1.2 million for the current three-month period compared to the prior year three-month period.

Cash flows provided by financing activities for the current three-month period primarily reflects $50.0 million in payments under our senior notes facilities, $8.0 million in net borrowings under our 2017 Credit Agreement, $5.7 million in net borrowings under our securitization facilities, a $3.7 million penalty paid in connection with the early payment of our 2021 Senior Notes. Cash flows provided by financing activities for the prior year three-month period primarily reflects $20.0 million in net borrowings under our securitization facilities.

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 March 31, 2018 and 2017, the outstanding amount of active consumer loans originated by third-party lenders under the CSO programs was $26.6 million and $22.5 million, respectively, which were guaranteed by us. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by us of $1.4 million and $1.2 million, as of March 31, 2018 and 2017, 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, 2017.

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 March 31, 2018 (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 March 31, 2018 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 10 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, 2017, except as follows:

We are subject to cyber security risks and security breaches and may incur increasing costs in an effort to minimize those risks and to respond to cyber incidents.

Our business involves the storage and transmission of consumers’ and businesses’ proprietary information, and security breaches could expose us to a risk of loss or misuse of this information, litigation, and potential liability. We are entirely dependent on the secure operation of our websites and systems as well as the operation of the internet generally. While we have incurred no material cyber-attacks or security breaches to date, a number of other companies have disclosed cyber-attacks and security breaches, some of which have involved intentional attacks. Attacks may be targeted at us, our customers, or both. Although we devote significant resources to maintain and regularly upgrade our systems and processes that are designed to protect the security of our computer systems, software, networks and other technology assets and the confidentiality, integrity and availability of information belonging to us and our customers, our security measures may not provide absolute security. Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources, including third parties outside the company such as persons who are involved with organized crime or associated with external service providers or who may be linked to terrorist organizations or hostile foreign governments. These risks may increase in the future as we continue to increase our mobile and other internet-based product offerings and expand our internal usage of web-based products and applications or expand into new countries. If an actual or perceived breach of security occurs, customer and/or supplier perception of the effectiveness of our security measures could be harmed and could result in the loss of customers, suppliers or both. Actual or anticipated attacks and risks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third party experts and consultants.

A successful penetration or circumvention of the security of our systems could cause serious negative consequences, including significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage to our computers or systems or those of our customers and counterparties, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on us. In addition, our applicants provide sensitive information, including bank account information when applying for loans or financing. We rely on encryption and authentication technology licensed from third parties to provide the security and authentication to effectively secure transmission of confidential information, including customer bank account and other personal information. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in the technology used by us to protect transaction data being breached or compromised. Data breaches can also occur as a result of non-technical issues. In addition, federal and some state regulators are considering rules and standards to address cybersecurity risks and many US states and the UK have already enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and may lead to widespread negative publicity, which may cause customers to lose confidence in the effectiveness of our data security measures.

Our servers are also vulnerable to computer viruses, physical or electronic break-ins, and similar disruptions, including denial-of-service attacks. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Security breaches, including any breach of our systems or by persons with whom we have commercial relationships that result in the unauthorized release of consumers’ personal information or businesses’ proprietary information, could damage our reputation and expose us to a risk of loss or litigation and possible liability. In addition, many of the third parties who provide products, services or support to us could also experience any of the above cyber risks or security breaches, which could impact our customers and our business and could result in a loss of customers, suppliers or revenue.

Any of these events could result in a loss of revenue and could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows.

Our ability to collect payment on loans and maintain the accuracy of accounts may be adversely affected by computer viruses, electronic break-ins, technical errors and similar disruptions.

The accessibility and automated nature of our platform may make for an attractive target for hacking, computer viruses, physical or electronic break-ins and similar disruptions. Despite efforts to ensure the integrity of our platform, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, in which case there would be an increased risk of fraud or identity theft, and we may experience losses on, or delays in the collection of amounts owed on, a fraudulently induced loan. In addition, the software that we have developed is highly complex and may contain undetected technical errors that could cause our computer systems to fail. Because each loan and financing provided involves our proprietary underwriting and fraud scoring models, and the applications are highly automated, any failure of our computer systems involving our proprietary credit and fraud scoring models and any technical or other errors contained in the software pertaining to our proprietary underwriting and fraud scoring models could compromise the ability to accurately evaluate potential customers, which would negatively impact our results of operations. Furthermore, any failure of our computer systems could cause an interruption in operations that may result in disruptions or reductions in the amount of collections from the loans and financings we provide to customers. If any of these risks were to materialize, it could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows.

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

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 – March 31, 2018 and 2017 and December 31, 2017	1
	Consolidated Statements of Income – Three Months Ended March 31, 2018 and 2017	2
	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2018 and 2017	3
	Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2018 and 2017	4
	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2018 and 2017	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55

SIGNATURES		56

	Lease Termination Costs			Other Exit Costs			Total
Balance at January 1, 2017	$	637		$	135		$	772
Payments		(554	)		(9	)		(563	)
Adjustments		(83	)		(126	)		(209	)
Balance at December 31, 2017	$	—		$	—		$	—

	As of December 31, 2017
			Gross Amounts		Gross Amounts		Net Amounts of Assets
			of Recognized		Offset in the		Presented in the
	Notional		Financial		Consolidated		Consolidated Balance
Forward currency exchange contracts	Amount		Instruments		Balance Sheets⁽¹⁾		Sheets⁽²⁾
Assets	$	—	$	—	$	—	$	—
Liabilities	$	12,039	$	55	$	—	$	55

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Contingent consideration		Total
Balance at December 31, 2016	$	2,358	$	2,358
Adjustments		—		—
Balance at March 31, 2017	$	2,358	$	2,358

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, 2018		—	$	—		—	$	21,454
February 1 – February 28, 2018		49,736		22.68		—		21,454
March 1 – March 31, 2018		—		—		—		21,454
Total		49,736	$	22.68		—	$	21,454

Exhibit No.		Exhibit Description


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: May 2, 2018	ENOVA INTERNATIONAL, INC.

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