Cuộc họp công bố kết quả kinh doanh Quý 3/2026 của Enova International (ENVA): Doanh thu vượt 1 tỷ USD

Điểm tin chính

• Enova International đã đạt hơn 1 tỷ USD doanh thu quý lần đầu tiên, tăng 26% so với cùng kỳ năm ngoái, khi tổng khoản phải thu tăng 30% lên 5,9 tỷ USD.
• Giá trị khoản vay mới phát hành tăng 31% lên 2,6 tỷ USD, đánh dấu quý thứ 12 liên tiếp đạt mức tăng trưởng ít nhất 20% so với cùng kỳ năm ngoái. Giá trị khoản vay mới phát hành cho doanh nghiệp nhỏ đạt 1,8 tỷ USD, trong khi giá trị khoản vay mới phát hành cho người tiêu dùng đạt kỷ lục 807 triệu USD.
• EPS pha loãng đã điều chỉnh tăng 33% lên 4,48 USD, đánh dấu quý thứ chín liên tiếp EPS đã điều chỉnh tăng trưởng ít nhất 30%.
• Hiệu suất tín dụng tiếp tục duy trì ổn định và có xu hướng cải thiện. Tỷ lệ xóa nợ ròng hợp nhất giảm xuống 8,1% từ mức 8,5% của một năm trước đó, trong khi biên doanh thu ròng tăng lên 61% từ mức 57%.
• Ban lãnh đạo dự kiến doanh thu quý 4/2026 sẽ tăng khoảng 25% so với cùng kỳ năm ngoái và EPS đã điều chỉnh tăng 30%–35%, tùy thuộc vào các điều kiện kinh tế vĩ mô, hiệu suất thanh toán và xu hướng phát hành khoản vay mới.
• Enova kết thúc quý với 1,3 tỷ USD thanh khoản và đẩy mạnh hoạt động mua lại cổ phiếu, bao gồm 46 triệu USD trong quý 3 và mức độ hoạt động tương tự trong tháng 10.

Dữ liệu tài chính chính

Kết quả kinh doanh và hoạt động

Các sản phẩm dành cho doanh nghiệp nhỏ chiếm 68% trong danh mục 5,9 tỷ USD của Enova, với các sản phẩm dành cho người tiêu dùng chiếm 32% còn lại. Tăng trưởng mảng doanh nghiệp nhỏ tiếp tục diễn ra trên diện rộng và ban lãnh đạo cho biết công ty tiếp tục thực hiện thẩm định cho vay trên hàng trăm ngành nghề, đồng thời theo dõi chặt chẽ các lĩnh vực như vận tải đường bộ, xây dựng và các doanh nghiệp chịu ảnh hưởng từ chính sách thương mại và thuế quan.

Tỷ lệ xóa nợ ròng của mảng doanh nghiệp nhỏ duy trì ở mức 4,8% so với quý trước và tiếp tục nằm trong phạm vi ghi nhận trong 12 quý qua. Tỷ lệ nợ quá hạn từ 30 ngày trở lên của mảng này đã tăng, nhưng ban lãnh đạo nhấn mạnh rằng tỷ lệ nợ quá hạn của doanh nghiệp nhỏ có sự biến động nhiều hơn và không nhất thiết là chỉ báo mạnh mẽ cho các khoản xóa nợ trong tương lai. Các doanh nghiệp có thể khắc phục các khoản thanh toán chậm sau khi thu hồi khoản phải thu hoặc nhận được sự hỗ trợ từ chủ sở hữu.

Giá trị khoản vay mới phát hành cho người tiêu dùng đạt kỷ lục theo quý, được hỗ trợ bởi tỷ lệ khách hàng mới cao hơn. Tỷ lệ xóa nợ ròng mảng người tiêu dùng giảm 100 điểm cơ bản so với cùng kỳ năm ngoái xuống 15,1%. Ban lãnh đạo đưa ra cảnh báo rằng tăng trưởng phát hành khoản vay mới cho người tiêu dùng khó có thể tiếp tục duy trì trên mức 30% và dự kiến tăng trưởng trong tương lai sẽ trở lại tốc độ điển hình hơn.

Khách hàng tiếp tục thể hiện sự ưa chuộng đối với hạn mức tín dụng tuần hoàn, mặc dù các khoản vay trả góp mới phát hành cũng tăng trưởng. Enova cho biết cả hai sản phẩm tiếp tục bổ trợ cho nhau trong danh mục cho vay người tiêu dùng của công ty.

Chi phí tiếp thị tăng lên 230 triệu USD, tương đương 23% doanh thu, từ mức 147 triệu USD, tương đương 18%, của một năm trước đó. Ban lãnh đạo giải thích sự gia tăng này là do nhu cầu mạnh mẽ, xu hướng tín dụng thuận lợi và hoạt động thu hút khách hàng—đặc biệt là đối với những người vay tiêu dùng mới. Chi phí hoạt động và công nghệ là 81 triệu USD, tương đương 8% doanh thu, trong khi chi phí quản lý doanh nghiệp là 46 triệu USD, tương đương 4,6% doanh thu.

Enova đã mua lại 243.000 cổ phiếu với giá 46 triệu USD trong quý 3, gấp hơn hai lần tốc độ mua lại của quý 2. Công ty bước vào quý 4 với 252 triệu USD hạn mức mua lại theo các cam kết trái phiếu cao cấp và cho biết số lượng mua lại trong tháng 10 đã tương đương với toàn bộ số lượng của quý 3.

Dự báo của ban lãnh đạo

Cho quý 4/2026, ban lãnh đạo đã đưa ra các kỳ vọng sau:

Triển vọng phụ thuộc vào môi trường kinh tế vĩ mô, nhu cầu của khách hàng và hiệu suất thanh toán, cũng như quy mô, thời điểm và cơ cấu của các khoản vay mới phát hành. Ban lãnh đạo cũng dự kiến chi phí vốn sẽ duy trì tương đối ổn định, do chênh lệch giá tín dụng thu hẹp giúp bù đắp cho lãi suất thị trường cao hơn.

Rủi ro và các mảng cần theo dõi

Ban lãnh đạo đã dẫn chứng lạm phát, các thay đổi lãi suất trong tương lai và tăng trưởng kinh tế là những yếu tố không chắc chắn về mặt kinh tế vĩ mô tiếp diễn. Tình hình việc làm vẫn đặc biệt quan trọng đối với hiệu suất tín dụng tiêu dùng, trong khi rủi ro đối với doanh nghiệp nhỏ biến động đáng kể theo ngành nghề và khu vực địa lý.

Tỷ lệ nợ quá hạn từ 30 ngày trở lên hợp nhất đã tăng so với quý trước lên 8%, phản ánh yếu tố mùa vụ thông thường của người tiêu dùng và mức tăng 40 điểm cơ bản trong tỷ lệ nợ quá hạn của doanh nghiệp nhỏ. Ban lãnh đạo cho biết thặng dư giá trị hợp lý vẫn ổn định hoặc cải thiện, nhưng biên lợi nhuận quý 4 sẽ phụ thuộc một phần vào hiệu suất thanh toán của danh mục và độ chín của các đợt phát hành khoản vay gần đây.

Công ty cũng đã rút đơn đăng ký với cơ quan quản lý để trở thành một ngân hàng. Ban lãnh đạo cho biết quyết định này không làm giảm triển vọng tăng trưởng hay khả năng sinh lời của công ty, đồng thời lưu ý rằng công tác chuẩn bị kế hoạch liên quan đến đơn đăng ký đã mang lại những góc nhìn mới về sản phẩm, hoạt động và quản trị rủi ro.

Tóm tắt phần Hỏi & Đáp với chuyên gia phân tích

• Sản phẩm mới: Enova đang đánh giá các sản phẩm ứng trước tiền gửi, cho vay tiêu dùng có tài sản bảo đảm và tài chính nhúng cho doanh nghiệp nhỏ. Ban lãnh đạo chưa cung cấp lộ trình ra mắt và cho biết thông tin cập nhật sẽ được đưa ra khi các sáng kiến đạt đến những mốc phát triển quan trọng.
• Cơ cấu khách hàng: Tăng trưởng tiêu dùng nhanh hơn đã làm tăng tỷ trọng khách hàng mới. Ban lãnh đạo kỳ vọng những người vay này sẽ hỗ trợ hoạt động vay lại trong tương lai, trong khi cơ cấu doanh nghiệp nhỏ giữa khách hàng mới và khách hàng quay lại vẫn duy trì ổn định hơn.
• Giám sát tín dụng: Enova sử dụng hành vi thanh toán sớm đối với các khoản vay tiêu dùng mới phát hành gần đây, đồng thời sử dụng dữ liệu sao kê ngân hàng điện tử, dòng tiền ròng và phân tích cấp ngành đối với các doanh nghiệp nhỏ. Ban lãnh đạo cho biết họ không thấy dấu hiệu suy giảm tín dụng trên diện rộng.
• Biên lợi nhuận: Biên doanh thu ròng mảng người tiêu dùng ở mức cao nhưng dự kiến sẽ bình thường hóa về mức khoảng 50% khi các đợt phát hành khoản vay mới hơn bước vào độ chín. Biên lợi nhuận mảng doanh nghiệp nhỏ vẫn nằm trong phạm vi điển hình từ 60%–70% của công ty.
• Hoàn trả vốn cho cổ đông: Ban lãnh đạo coi việc mua lại cổ phiếu là một công cụ để quản lý đòn bẩy và hoàn trả vốn thặng dư trong khi vẫn duy trì mức thanh khoản và vốn hữu hình phù hợp. Việc mua lại cổ phiếu vẫn phải tuân thủ các giới hạn cam kết trái phiếu cao cấp.

Toàn văn bản ghi cuộc họp báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to the Enova International Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lindsay Savarese, Investor Relations. Please go ahead.

Lindsay Savarese

Thank you, operator, and good afternoon, everyone. Enova released results for the third quarter 2026 ended September 30, 2026, this afternoon after market closed. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at ir.enova.com.

With me on today's call are Steve Cunningham, Chief Executive Officer; and Scott Cornelis, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to Steve, I'd like to note that today's discussion will contain forward-looking statements, and as such, is subject to risks and uncertainties. Actual results may differ materially as a result from various important risk factors, including those discussed in our earnings press release and in our annual report on Form 10-K quarterly reports on Form 10-Q and current reports on Forms 8-K.

Please note that any forward-looking statements that are made on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. In addition to U.S. GAAP reporting, Enova reports certain financial measures that do not conform to generally accepted accounting principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between GAAP and non-GAAP measures are included in the tables found in today's press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website.

And with that, I'd like to turn the call over to Steve.

Steven Cunningham

Thank you, Lindsay, and good afternoon, everyone. I appreciate you joining our call today. We're pleased to report another quarter of healthy growth in credit as originations, receivables, revenue and adjusted EPS all grew 25% or more year-over-year. Our third quarter results are a testament to the strength of our strategy, improving capabilities and the powerful combination of our talented team, diversified product offerings, scalable online-only operating model and world-class risk management capabilities.

Reflecting the demand we saw during the quarter, originations growth was strong across both consumer and small business, resulting in consolidated originations of $2.6 billion which was up 31% from the third quarter of 2025. This marked our 12th consecutive quarter of consolidated year-over-year originations growth of 20% or more. Originations growth increased our consolidated portfolio to $5.9 billion or 30% higher than a year ago, with small business products representing 68% of the portfolio and consumer products accounting for 32%.

With strong portfolio growth, revenue increased 26% year-over-year and exceeded $1 billion during the quarter for the first time in our history. In addition, net charge-off rates across the portfolio reflects stable or improving performance with the consolidated net charge-off ratio for the third quarter, declining to [ 8.1% ] from 8.5% in the year ago quarter. This solid credit performance, combined with the operating leverage inherent in our online-only business model drove a 33% increase in adjusted EPS from a year ago, marking the ninth consecutive quarter of year-over-year growth in adjusted EPS of [ 30% ] or more.

Our results for the third quarter reflect a resilient macroeconomic environment despite ongoing concerns about inflation and potential impacts on future interest rates and economic growth. The most recent Federal Reserve Beige Book showed economic activity increasing across most of the country with no district reporting a decline. In addition, the Commerce Department's latest GDP revisions show the economy is stronger than first reported as both first and second quarter GDP growth was revised higher.

Broader economic strength has supported a steady labor market characterized by weekly unemployment claims and a tight band around historical lows, stable unemployment rate and wage growth pacing with inflation. Our consumer results reflect the resiliency of the U.S. consumer as originations during the quarter reached a record $807 million, 37% higher than the third quarter of 2025 while consumer revenue grew 21% over the same period. In addition, the consumer net charge-off rate followed our typical seasonality sequentially and declined 100 basis points from the third quarter of 2025 to 15.1%.

Recent data also shows that U.S. consumers continue to spend despite recent decline in sentiment. The Bureau of Economic Analysis reported that consumer spending during August was the largest monthly increase this year on the heels of a healthy base of spending during the second quarter. Consumer spending not only plays a key role in overall economic growth, it is a fundamental driver of the health of small businesses. Against this constructive consumer and macroeconomic backdrop, small business confidence remained high, in line with previous findings, our 12th edition of the small business cash flow [ trend ] report released in conjunction with [ Aqualis. ] found that small businesses remain optimistic about the future, with 93% of small business expecting moderate to significant growth over the next year.

Recent surveys from the Chamber of Commerce and the NFIB have echoed similar small business optimism, and the majority of small business owners responding to these surveys remain confident in the health of their own individual businesses. Notably, according to the NFIB, the top reported issue among small businesses was no longer inflation but instead it's been replaced by labor quality and availability which is a positive sign for the future stability of the labor market.

Continued small business confidence and financial health is reflected in the continued growth and stable credit of our SMB business. SMB originations rose 28% from the third quarter of 2025, resulting in a 34% increase in our well-diversified portfolio as we continue to leverage our leading brand presence scale and strong competitive position.

In addition, the SMB net charge-off rate was unchanged from last quarter at 4.8% and has remained in a tight range, consistent with our expectations over the last 12 quarters while quarterly year-over-year originations growth has consistently exceeded 20% over the same period. As we've moved into the fourth quarter, we continue to see stable growth in credit across both our consumer and SMB businesses. As Scott will discuss, assuming the operating environment stays constructive as it has all year, we expect to close 2026 with strong fourth quarter financial results.

Before I wrap up, I'd like to spend a few moments discussing our strategy and outlook. Our business is as healthy as ever, and we remain well positioned to continue delivering on our commitment to driving long-term shareholder value on meeting our mission of helping hardworking people get access to fast, trustworthy credit. We have built a high-growth, highly profitable and resilient business at Enova, serving large fragmented markets with diversified products powered by our online-only business model, world-class technology and risk management, talented team, and competitive funding capabilities. We've never wavered from our focus on meeting the credit needs of consumers and small businesses that are not well served by traditional banks and those populations are large with upwards of 100 million consumers and more than 35 million small businesses in the U.S., most with credit needs that fall outside of the interest or underwriting expertise of traditional banks.

Over the years, we've adapted and evolved to strengthen and diversify our business while responsibly meeting the credit needs of these customers and today, offer both installment and line of credit products across the entire nonprime credit spectrum with risk-based pricing reflecting the repayment risk of the borrower. Our exclusive online-only focus as is well positioned to capture the rapidly increasing customer preferences for quickly transacting digitally anywhere and at any time. And uniquely, we serve both consumers and small businesses with these products and capabilities at scale. The application of our powerful machine learning analytics to the fast feedback from our product repayment terms in combination with our unit economics discipline allows us to adapt quickly to emerging issues or opportunities across a wide range of operating environments to deliver consistent financial performance.

In fact, in our 12-year history as a public company, we have never experienced a quarter of negative adjusted net income. That consistency has supported our ability to raise financing with highly competitive terms and rates that support our flexibility, profitability, and capital return capabilities. Our ability to continue to deliver meaningful growth and profitability has not been diminished at all by our decision last month to withdraw our regulatory applications to become a bank. In fact, our planning over the past year brought to light new product, operational and risk management insights that will support meaningful long-term growth by defending and extending our competitive positions and allowing us to leverage our technology and analytics capabilities to continue to take share in existing markets and thoughtfully expand into adjacent markets, either directly or with partners.

As we always have, we'll continue to adapt our existing offerings and experience as the competitive environment and customer preferences change. Additionally, we'll explore expanded offerings such as a deposit advance product, secured consumer lending and SMB embedded finance offerings as we address new opportunities. We'll continue to follow the approach that has driven our innovation for many years, focus on areas with the greatest opportunities through testing and experimentation while being very deliberate with launching and scaling new initiatives, products and geographies.

As we look forward to the significant opportunities ahead of us, we believe there is meaningful upside to our current share price and continuing to unlock the value our company creates remains a top focus of Enova's leadership. In addition to investing in the aforementioned growth opportunities, we will also continue to opportunistically lean into share repurchases to support our valuation.

To wrap up, we are pleased to deliver another quarter of strong growth and profitability. Our future is bright, and we remain focused on generating sustainable and profitable growth while delivering on our commitment to driving long-term shareholder value and our mission of helping hard-working people get access to fast, trustworthy credit.

With that, I'd like to turn the call over to Scott Cornelis, our CFO, who will discuss our financial results and outlook in more detail. And following Scott's remarks, we'll be happy to answer any questions you may have. Scott?

Scott Cornelis

Thank you, Steve, and good afternoon, everyone. As Steve noted in his remarks, we're pleased to deliver another quarter of top and bottom line financial performance that exceeded our expectations. Our third quarter results reflect strong growth in originations, receivables, and revenue complemented by solid credit, continued operating leverage and balance sheet flexibility.

Turning to our third quarter results. Total company revenue of $1 billion increased 26% from the third quarter of 2025 and driven by a 30% year-over-year growth in total company combined loan and finance receivable balances on an amortized basis. Total company originations during the third quarter rose 31% from the third quarter of 2025 to $2.6 billion. Revenue from small business lending increased 32% from the third quarter of 2025 and to $459 million as the small business receivables on an amortized basis ended the quarter at $4 billion or 34% higher than the end of the third quarter of 2025.

Small business originations rose 28% year-over-year to $1.8 billion. Revenue from our consumer businesses increased 21% from the third quarter of 2025 and to $537 million as consumer receivables on an amortized basis ended the quarter at $1.9 billion or 24% higher than the end of the third quarter of 2025. Consumer originations grew 37% from the third quarter of 2025 to $807 million, reflecting the continued reacceleration in consumer growth along with the strong credit we have seen over the past year.

For the fourth quarter of 2026, we expect total company revenue to be around 25% higher year-over-year. This expectation will depend upon the level timing and mix of originations growth during the quarter. Now turning to credit, which is the most significant driver of net revenue and portfolio fair value. The consolidated net revenue margin for the third quarter was 61%, slightly better than our expected range and up from 57% a year ago as third quarter net charge-offs for the consumer, small business, and consolidated portfolios reflected continued stable to improving credit performance.

The consolidated net charge-off ratio for the third quarter was 8.1%, an improvement from a year ago, driven by a 100 basis point year-over-year improvement in the consumer net charge-off ratio. SMB net charge-off rate of 4.8% was flat sequentially. And as Steve noted, has remained in a tight range consistent with our expectations over the last 12 quarters.

The consolidated 30-plus day delinquency rate increased sequentially to 8% and driven by typical consumer sequential seasonality and a 40 basis point sequential increase in the SMB 30-plus day delinquency rate. As seen over the past 2 years, the 30-plus delinquency rate can vary more than the net charge-off ratio quarter-to-quarter. Small business customers often have multiple options for curing late payments. So payment delinquencies can be temporary before customers return to current status rather than rolling more predictably to charge-off [ once delinquent, ] as is more typical with consumer loans.

Combined with the effect of the size and timing of recent originations on the ratio, SMB delinquency rates have been more variable quarter-to-quarter recently, while charge-offs have held in a relatively narrow expected range. The consolidated consumer and SMB fair value premiums are all stable or improving sequentially and year-over-year reflecting the quality of our recent originations and seasoning as expected lifetime loss curves.

Looking ahead, we expect the total company net revenue margin for the fourth quarter of 2026, and to be in the 55% to 60% range. We expect the SMB net revenue margin to remain in the typical 60% to 70% range and we expect the consumer net revenue margin should continue to trend toward a more typical level of around 50% as our recent vintages continue to season as expected. This expectation will depend upon the portfolio payment performance and the level, timing, and mix of originations growth during the fourth quarter.

Now turning to expenses. Total operating expenses for the third quarter, including marketing, were 35% of revenue compared to 31% of revenue in the third quarter of 2025. Our marketing spend continues to be efficient and supported the originations growth we delivered during the quarter, particularly from new consumer customers. As we have discussed in the past, market demand and the credit we observe across our products drive our marketing spend. During the third quarter, strong demand and credit, combined with our nimble and sophisticated technology and analytics and the rapid credit feedback from our products allowed us to efficiently scale our marketing investments and originate loans with attractive unit economics.

Marketing costs were 23% of revenue or $230 million compared to 18% of revenue or $147 million in the third quarter of 2025. As a percentage of total originations, marketing remains within our expected range. We expect marketing expenses to be around 20% of revenue for the fourth quarter, which will depend upon the growth and mix of originations.

Operations and technology expenses for the third quarter were 8% of revenue or $81 million compared to 8% of revenue or $65 million in the third quarter of 2025. Given the significant variable component of this expense category, sequential increases in O&T costs should be expected in an environment where originations and receivables are growing, and we expect O&T cost to be around 8% to 8.5% of total revenue going forward.

Our fixed costs continue to scale as we focus on operating efficiency and thoughtful expense management. General and administrative expenses for the third quarter were $46 million or 4.6% of revenue compared to $40 million or 4.9% of revenue in the third quarter of 2025. The current quarter included $1.4 million of costs related to the Grasshopper transaction. Excluding these items, G&A expenses were $45 million or 4.4% of revenue. While there may be slight variations from quarter-to-quarter, we expect G&A expenses in the near term will be between 4.5% and 5% of total revenue, excluding any onetime costs.

Our balance sheet and liquidity position continue to give us the financial flexibility to successfully navigate a range of operating environments, while delivering on our commitment to drive long-term shareholder value, through both continued investment in our business and returning capital through share repurchases. We ended the third quarter with $1.3 billion of liquidity including $508 million of cash and marketable securities and $817 million of available capacity on our debt facilities.

Our cost of funds for the third quarter was 8% and down slightly from the second quarter and 60 basis points lower than a year ago as we continue to see strong execution in the capital markets. During the quarter, we completed the largest term securitization in OnDeck's history at a lower credit spread than a comparable transaction a year ago, and we increased available capacity on our debt facilities by more than $350 million from the end of the second quarter. During the third quarter, we more than doubled our pace of share repurchases from the second quarter, repurchasing 243,000 shares at a cost of $46 million leaving $252 million of repurchase capacity available under our senior note covenants entering the fourth quarter. As Steve mentioned, we believe there is meaningful upside to our current share price and we expect to continue to opportunistically lean into share repurchases.

So far in October, we have already matched our buyback activity for the entire third quarter. Finally, we continue to deliver meaningful profitability this quarter. Compared to the third quarter of 2025, adjusted EPS, a non-GAAP measure, increased 33% to $4.48 per diluted share, resulting in an annualized quarterly return on equity in excess of 30%.

To wrap up, let me summarize our expectations. For the fourth quarter, we expect consolidated revenue to be around 25% higher year-over-year with a net revenue margin in the 55% to 60% range. Additionally, we expect marketing expenses to be around 20% of revenue, O&T costs of around 8% to 8.5% of revenue and G&A costs of 4.5% to 5% of revenue. These expectations should lead to adjusted EPS for the fourth quarter of 2026, that is 30% to 35% higher than the fourth quarter of 2025.

Our fourth quarter expectations will depend upon the path of the macroeconomic environment and the resulting impact on demand, customer payment rates and the level, timing and mix of originations growth. Our performance this quarter reflects the consistency of our model, a diversified product set, a scalable online-only platform, and a disciplined approach to unit economics that has delivered dependable results across many environments. Backed by a strong balance sheet and a talented team, we are well positioned to keep investing in the business, return capital to shareholders and delivered profitable growth and long-term value.

And with that, we'd be happy to take your questions. Operator?

Operator

[Operator Instructions] Our first question today comes from John Hecht with Jefferies.

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John Hecht

I guess the first 1 is just you talked -- Steve, you talked about new products, and you gave a pretty strong list of them. Maybe can you give us kind of a sense for timing and how you might prioritize these new products and when they move -- when we may kind of see them hit the market and the revenue?

Steven Cunningham

Yes. John, thanks for joining us today. The product list that I gave you those examples obviously, we had mentioned some of those before over this year. So we've already begun thinking about those. And so we will be thinking about how, as I mentioned in my remarks, how we go to market. So I think our approach in the past, I think I've told you is that I'm giving you a little bit of a sense of what we're thinking about in terms of innovation.

It's not something that we intend to update you on every quarter, but I think we like the results speak for themselves. And if they start to become more meaningful parts of our business or we hit certain milestones, we'll give you updates. But the biggest point is that as we look forward, we expect that we are going to lean into the capabilities that we've built to look for opportunities to build adjacencies to innovate within the products that we have today and leverage those strengths that you've come to know from us. right.

John Hecht

We'll look forward to all those announcements. With respect to our strong origination flows that we've observed for several quarters, maybe can you talk about a new customer mix of new versus recurring? And then any different any change in composition like of new -- of the small business side in terms of the types of industries you're focused on?

Steven Cunningham

Yes. Well, so I think if you look across new versus returning just with the return of growth this year in consumer. If you remember last year, third and fourth quarter, we were growing more like lower single digits year-over-year on purpose, if you go back and remember, our commentary back then. So as we got back to sort of our normal approach in the marketplace, you've seen those growth rates pick up the pace, in some cases, on easier laps so you shouldn't expect we're going to sustain 30-plus percent growth rates in consumer I would expect that it will look a lot more typical to what you saw back in prior years. It won't be low single digits, but it's not going to be 30% plus.

Anytime you're doing that, you're going to see a bit more new customers in the mix. I would say in the consumer side of things, we've seen an uptick over the past few quarters is that growth rate has picked up with more new customers, which is great because those will be returning customers for us as we move through time.

The SMB side of things has been a bit more stable as it relates to new and returning. And I would say we haven't we're -- John, we're underwriting into hundreds of industries are, what I would call, the watchlist. The industries we pay special attention to that we've mentioned in the past like trucking or construction or those industries that have been more exposed to trade and tariff policies. We continue to keep a close eye on those but we're not really rotating materially different in terms of our industry push or exposures. We're really following what we've always done, which is making sure that we're reaching the customers in underwriting as many as we can while meeting the unit economics framework that's been so critical to our success over the past

Operator

The next question is from Bill Ryan with Seaport Research Partners.

William Ryan

First one is looking at the consumer loan origination mix looked like it kind of shifted a bit more towards revolving this quarter. installment was still up year-over-year in originations, but the cadence of increase kind of slowed a little bit. Are you seeing a change in consumer preference for the type of consumer loan that they're taking out? And I have 1 follow-up question.

Steven Cunningham

Yes. We're -- as we talked about before, we're pretty indifferent in terms of where the process comes from. Over time, we have seen that consumers definitely prefer that line of credit products, and you've seen that growth over time, outstripping installment. But there are times when we see the installment piece of the consumer book growing faster than the line of credit business.

So I would say it's a bit of a reflection of us continuing our growth this year the customer preference for the line of credit products that we offer. And as you pointed out, the installment business is continuing to grow nicely as well. So the 2 of those working -- work well together and complement each other and allow us to meet the preference that the customers have that we're attracting into our franchise.

William Ryan

Okay. And then following up on the small business, the delinquencies, as you know, they were up a bit year-over-year. Charge-off rate pretty stable, and you talked about that there's several ways that small businesses can cure themselves that consumers do not have that option. If you can maybe talk about what some of those pure mechanisms might be. And then if this trend continues and the charge-off rate remains stable, I know you've always talked about the SMB revenue margin kind of normalizing over time. But if this is the case, is it possible that it stays elevated, that maybe we're kind of at a new normal in SMB at this point?

Steven Cunningham

Let me just say, I think the SMB net revenue margin is in the normal range. I mean I would say the 60% to 70% range is the range that Scott's guided to over time. we're sitting in the upper half of that. But we kind of bounce around that 65% plus or minus quite frequently. So I would say we're sort of sitting in a more normal than not normal range for the net revenue margin. .

And I think the point in Scott's commentary around delinquency cure rates in SMB, if you think about consumers, it's very employment driven. If you lose your job and you can't get another job, you're sort of dependent on savings or otherwise. And so you see roll rates, I think if you look over time, we're a little bit more predictable through the delinquency buckets. I think SMBs are a little bit different. So think about a small business that as an owner and they're doing very well. Perhaps they've not collected the receivables as quickly as they would have hoped they might fall behind the payment, but they quickly catch up as those receivables are collected or you might have a proprietor that steps in to bridge on the way.

So you end up with more variability in terms of, I'll call it, bouncing around in delinquency buckets or people behind the payment and paying you and haven't completely caught up to current they're stuck in a bucket as well. So the point of all that is the -- and you can see this if you look at our supplement, is that those 30-plus delinquency rates are not great predictors of future net charge-off rates because of that. And in addition, we've advanced our capabilities on the collection side over time as well, where in addition to traditional collection practices, we also have a lot more self-service and digital capabilities, which helps these customers cure and do it on their own terms as well.

Operator

[Operator Instructions] The next question is from David Scharf with Citizens Capital Markets.

David Scharf

Steve, hear you loud and clear on the stable credit trends. It's consistent with what we're hearing elsewhere. I did want to just follow up a little on the prior question about consumer versus SMB. And I guess, in particular, still since delinquencies tend to be more variable and volatile as you said, with SMB.

Is there a way to internally -- are you able to gauge whether consumer or SMB is sort of a better leading indicator of potential credit stress down the road. It seems like households have almost gotten used to inflation and adapted to it well. but higher input costs can impact the business in a lot of turn ways. And I'm just wondering if you're seeing any indicators that are different when you analyze your small business borrowers than your consumer borrowers?

Steven Cunningham

So listen, I think on the consumer side of things, obviously, employment is very important, right? And as we've talked about in the past, the way we monitor our credit performance, we can see very quickly let's just say, initial defaults on recently originated vintages are a really good indicator of how things are going. And we're fine-tuning that all the time, but we probably -- it was something big going on, and there absolutely is not. We would probably see it faster in our book, just given our breadth than you would in the macro stats.

I think on the small business side, it's a lot less homogeneous than consumer as I mentioned, we're in hundreds of industries and through different economic cycles, and there are still industries that are doing very well that you lend to and there's industries all the time that you're being careful with even in the best of time. So we have a very structured approach to that industry evaluation, similar to consumer, we're definitely looking at mispayment rate as indicators where they vary from what we would have expected. But we're also trying to get an early read by looking into our electronic bank statement data for net cash flow, the quality of Atkins, all those things that can give you an early read on where there may be stress in certain industries or certain corners of the country.

So I think we've spent a lot of time and energy with the team building these capabilities. And I feel like we have a really good idea as we demonstrated last year that we know when we need to pull back we start to see things that we don't expect. And I would tell you right now, it's a very constructive environment as I highlighted, and we see very stable to improving credit overall across our portfolio, which has supported our ability to continue to grow nicely.

David Scharf

Got it. That's very helpful. And maybe just as a follow-up. On the capital side, I know that your level of buybacks is covenant constrained or covenant defined, but taking a step back, if we sort of suspended reality and ignored our senior note covenants for a moment, how do you think about the target ROE of the business and whether there's a natural feeling on it that indicates more capital should be returned. I mean, you're kind of operating in the high 20s at this point.

Steven Cunningham

Yes. Let me -- I'll start and then Scott can weigh in. But I think the way if you think about leverage being a pretty important factor, our capital ratio is a pretty important factor in that equation as well. We have a unit economic approach that's ROE driven. We've been over 25% ROE for a long period of time with very healthy tangible capital. And so I think we look at the buyback as an opportunity to manage both leverage and to manage opportunism to support valuation. And I'd say right now, our tangible capital position is pretty healthy. we've got some room to tighten that down a bit in addition to the fact that our ROEs are growing at or about the same or maybe a touch higher than our growth rate, which gives you some excess capital to return as well So I think it's a combination of how all those things work together.

But I would tell you we are within those covenant constraints, we are very well positioned to opportunistically buy as we -- as Scott pointed out in his comments, we've already in the month of October, matched what we did in the third quarter. So we intend to be opportunistic, particularly at these valuation levels to support the value of the company. And while maintaining appropriate leverage and supporting our cash flow as well.

Operator

The next question is from Kyle Joseph with Stephens.

Kyle Joseph

Steve, Scott. Most of them have been answered, but just kind of want to get your thoughts on NIM kind of as we think about the mix shift in terms of asset yields and any sort of shifts or anything you'd highlight there? And then on the cost of funds side, I mean, obviously, we know what rates have done. But I think Scott highlighted some good execution on the ABS front. So any incremental color you can provide us there.

Scott Cornelis

Yes. I mean I think on the NIM front, we talked about our stable net revenue margin. We've seen the performance. And so I think no real change in what we'd expect from our NIM on both consumer or small business. And then on the cost of funds, yes, we had some nice execution on that ABS deal that I mentioned and our spreads -- credit spreads continue to tighten seemingly every transaction we do, which is a great testament to the performance of the underlying assets. But the market interest rates are backing up a little bit, but I think the spreads kind of counteract that. So we expect a pretty stable cost of funds as we move forward.

Steven Cunningham

Kyle, let me add on too. Just a reminder on the net revenue margin front. The consumer side of things has been a bit elevated. And I think Scott highlighted in his comments that as we get settled back in with those, I'll call them the lapse, right, we've been growing that portfolio nicely against some comparables from last year. So as we start to settle back in where the new vintages start to become sort of a similar size that we've seen past relative to the back book, you would expect that, that net revenue margin will be around 50% again. Today, we're overachieving that. But our outlook assumes that we continue to see that net revenue market in particular for consumer to get back into that normal 50-ish range from where it's been over the past couple of quarters.

Kyle Joseph

Got it. And then just in terms of the marketing guidance, obviously, it came in -- it's come in higher than that last few quarters. I think that's directly attributable to better originations, which is obviously not a bad thing. So just sort of thinking about that, should we think about that as kind of a baseline and if there's more opportunities out there, that will be higher, but obviously, that's kind of a net positive.

Steven Cunningham

Yes. I think that's why we've said around 20% for a long time. I mean, not that long ago, we were getting questions as to why we were consistently below 20 on -- we've been a little above 20% with -- again, as we've talked about in the past, we're not leaning into marketing. It's really like that marketing is supporting our ability to meet that demand in the marketplace. So when we say around 20%, it's plus or minus, right? I think we're operating within that range that we would expect when we say around 20. So Obviously, it depends on the macro environment and consumer demand, as we talked about in the past, but that's probably the best way to think about it before.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Steve Cunningham for any closing remarks.

Steven Cunningham

We thank you all for joining our call today, and we look forward to updating you again next quarter. Have a good night.

Operator

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