Good afternoon and welcome to the Enova International third quarter 2017 earnings conference call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Monica Gould. Please go ahead.

Thank you Brian and good afternoon everyone. Enova released results for the third quarter of 2017 ended September 30, 2017, 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, David Fisher, Chief Executive Officer and Steve Cunningham, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website. Before I turn the call over to David, I would like to note that today's discussion will contain forward-looking statements based on the business environment as we currently see it and as such, does include certain risks and uncertainties. Please refer to our press release and our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's discussion. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. In addition to U.S. GAAP reporting, we report certain financial measures that do not conform to Generally Accepted Accounting Principles. We believe these non-GAAP measures enhance the understanding of our performance. Reconciliations between these GAAP and non-GAAP measures are included in the tables found in today's press release. As noted in our earnings release, we have posted supplemental financial information on the IR portion of our website. And with that, I would like to turn the call over to David.

Thanks Monica and good afternoon everyone. Thanks for joining our call today. As usual, I am going to start by giving a brief overview of the quarter, then I will update you on our strategy and finally, I will share our perspectives looking forward. After remarks, I will turn the call over to Steve Cunningham, our CFO, to discuss our financial results and guidance in more detail. In Q3, we continued to focus on growing our six businesses and we are pleased with the performance and profitability we generated. Third quarter revenue was at the high end of our guidance at $218 million, an 11% increase over the third quarter of last year as we saw healthy demand across our products. Adjusted EBITDA for the quarter was $34.2 million and adjusted net income of $8.6 million or $0.25 per share was also at the high end of our guidance ranges. These strong financial results were driven by continued solid credit combined with efficient marketing, which offset somewhat higher non-marketing operating expenses from variable loan transaction related expenses as well as investments in technology and analytics personnel to support growth. As I just mentioned, we continue to see stable credit metrics across our portfolio. While our net charge-offs are higher than last year, this is almost exclusively attributable to the strong new customer volumes we have seen over the last several quarters. In fact, in Q3 we generated the highest mix of new customers since I have been at Enova. This creates a nice tailwind for us as these new customers increase our revenue generating asset base going forward. Another sign of stable credit was our gross profit margin in Q3 of 51%, which is within our guidance range as our near-term credit performance has been good and we are receiving…

Thank you David and good afternoon everyone. I will start by reviewing our financial and operating performance for the third quarter and then provide our outlook for the fourth quarter and the full year 2017. Our financial performance was solid this quarter and represents the eighth consecutive quarter where we have delivered within our guidance ranges. Revenue, adjusted EBITDA and adjusted EPS all came in at the high end of our expectations. Total revenue was $217.9 million in the third quarter, which increased 11.2% from the year ago quarter. Foreign currency exchange rates did not have a significant impact on total company revenue compared to the third quarter last year. Year-over-year revenue growth was driven by growth in total company combined loans and finance receivable balances which increased 15.6% year-over-year to $771.7 million from $667.3 million in the third quarter of last year. Line of credit products and installment loan products continue to drive the year-over-year increases in total loans and finance receivables balances. Total company originations rose sequentially by 10.9% and decreased 2.3% year-over-year. As David mentioned, the strong growth in total company combined loans and finance receivables balances combined with slightly lower total company originations reflects on the effectiveness of our diversification based on our strategy of focused growth across our six businesses. In particular, we have been generating faster receivables growth in our line of credit and installment loan products across our six growth businesses. These products have longer durations and have higher average loan amounts. As a result, we are able to drive higher receivables and revenue growth with fewer originations resulting in less effort at lower costs. This is a contributing factor to the recent trend of lower marketing expense as a percentage of revenue. While we may see some variation from quarter-to-quarter, we expect…

Thanks Steve. And now we will open up the call for any questions you may have.

[Operator Instructions]. First question comes from David Scharf with JMP Securities. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. David, I am wondering, just to help put things into context, the 30% of origination volume, that was a record coming from new customers. Maybe over the last two years, eight quarters or so, what is the lowest that figure has ever been?

I don't have that eight quarter number, but I can tell you three, four years ago, it was as low as the kind of the low to mid teens. So that number has come way up which is really a terrific sign in the strength of our marketing effort really over the last three, four years. This has been an ongoing improvement from our teams and to be able to increase that number from the low to mid teens four, five years ago when I started here to where we are today is a great sign for our future.

Got it. And as we think about that very wide range of gross margin guidance, the 505 to 60%, obviously so much of that is driven by the mix of new versus repeat users. Do you think this 30% is close to a peak? Or is there a number you even have in mind that you feel not so comfortable going above?

We will take as many new customers as we can get which is why we gave somewhat wide ranges across all of our guidance, because mix is the big driver for that. There is also other factors like the calendar affects our gross margin more significantly than you might imagine, kind of what day of the week the quarter ends on could have a several point swing in our gross margin for that quarter. It will swing back the following quarter. But for a quarter it can have a fairly wide swing. So short term mix, calendar, those kinds of things can move gross margin pretty significantly, which then obviously drives gross profit and can move EBITDA around a lot, which is why our guidance ranges are wide. But that longer-term trend has been very positive and keeping those, we have been able to deliver results within those guidance ranges and when you look deeper into the business with metrics like new customer growth and with some of the other credit metrics, we continuously very positive trends.

Got it. And given the variability in product mix shift quarter-to-quarter, I am just wondering, on an annual basis, we realize originations can shift around a lot and it looks like with longer duration larger loans you are growing your balances nicely without having to originate as much. Is the mid teens year-over-year growth in balances for line of credit installment a pretty good way for us to think about the balance sheet growth near-term?

We take that kind of growth rate as sustainable. And hopefully we can do more. But that's certainly not something we view as an anomaly.

Got it. And then lastly and I will jump back in line here. On the renewal of the NetCredit securitization, is there anything on the terms that change materially? I didn't know if there was a reference to the cost of funding there, Steve?

There was, David. There is one. You may remember we had two classes previously. There is one class of issuance now and it's at LIBOR plus 750. You may recall, there was the minimum 9.5% cost in the prior renewal.

Right.

And we will issue once a quarter. So the variable note is a little bit larger than the monthly issuance variable note that we had in the previous renewal.

Got it. Great. Thanks so much guys.

Next question comes from John Rowan with Janney. Please go ahead.

Good afternoon guys.

Hi John.

I am just trying to square up the fourth quarter guidance. It looks like the difference between GAAP and operating is about $0.15. That obviously is not going to all stock-based comp. I am just trying to figure out if there are any type of other one-time items that are coming in the fourth quarter that make that GAAP so large?

You are talking about the GAAP EPS, John?

Yes. There is $0.15 differential between your GAAP earnings per share and your operating earnings per share in the fourth quarter which is a lot better than it typically is.

Yes. So you will see in the 8-K on the securitization renewal that we refinanced all of the existing notes into the new facility. And really the reason for that is it will save us money over the long haul and allowed us to utilize the newer advance rates to draw more liquidity. Similarly to the redemption on the senior notes during the quarter, there will be an upfront charge for that. But overall this is an NPV positive trade. So that's really what's happening with the range from GAAP EPS.

Okay. That makes sense. I just wanted to make sure that wasn't a new run rate with the differential there because obviously that's not all stock-based comp. So you happen to know what the dollar charges are you going to recognize in the fourth quarter for that change?

It will likely be between $5 million and $6 million, non-cash.

Non-cash. Okay. And then when you guys mentioned it in the prepared remarks, David, I think you talked about with the preauthorization to deduct out of accounts under the CFPB rules and how that would potentially impact some of your installment products? Can you give us an idea of how your current policies for authorizing debits out of consumer accounts would juxtapose versus what the CFPB's final rules mandate?

Yes. They are not terribly different because supplement ourselves. We self limit our current debiting process on that loan to a couple of failed attempts in most cases. So the big change isn't the number of debits, it's getting reauthorized when we talk to the customer to set up a payment plan and those kind of things. We don't think that's going to be a major change to our overall processes. We use a lot of good analytics to make sure we have the most efficient and effective debiting as possible within the rules. We use that already to stay within the natural return limits. And so adapting those same analytics capabilities to the new CFPB rules, we don't think is going to have a major impact across our line of credit installment loan products.

Okay. And just last question. Steve, I think you said G&A expense for the fourth quarter between 11.5% to 12% of revenue. Did I hear that right?

That is right.

Okay. Thank you.

[Operator Instructions]. Next question comes from Michael Del Grosso with Jefferies. Please go ahead.

Hi. Thanks for taking my questions. First one is on the allowance. Seasonally last year we saw a relatively flat reserve quarter-over-quarter from the third to the fourth quarter. Given the new customer mix you mentioned you experienced this quarter, is it fair to expect some more seasonality in that this year?

Yes. I think you would expect to see particularly depending on the mix, there will be growth and new customer mix will obviously drive that. But there definitely is a seasonal aspect to the allowance.

Okay. So when you say growth, we should expect that to tick up a bit? Or are you seeing more flat?

The amount of allowance coverage obviously depends on the mix in the portfolio and the mix of new versus returning. So fourth quarter is obviously our strongest growth period. And as we have mentioned, we are seeing a lot of that growth coming from the non-short term pieces of the portfolio. So there maybe a little bit of comparability issues from prior periods just because of that. But I think you should expect those are going to be the key drivers in terms of where the allowance would sit at the end of the quarter.

Okay. Thank you. That's helpful. And then David, I think last quarter you mentioned you were seeing some state level legislative activity in Maryland? Any update there or any other states we should put on the radar in terms of new activity?

Yes. I mean Maryland was a few quarters ago. We talked about how under the new Maryland rules that went to effect two quarters ago now, we are not allowed to originate new lines of credit in Maryland. We do still have installment lending in Maryland. But we can continue to lend to our existing line of Credit customers in Maryland. So there hasn't been a significant impact there. Beyond Maryland, it's been a little quite because some of them are not in session. They are just kind of getting back into session now. We actually are somewhat optimistic that the final CFPB rule being published will decrease state activity as they will see finally that there is a federal rule out there addressing the space and that will reduce the impetus to try to do something at the state level. We have a couple of indications of that already from a couple of states and we will continue obviously to keep an eye on it as we get deeper into the session here into the late fall and early winter.

Great. Thank you.

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

Thanks everybody for joining us again today. We look forward to updating you on our progress next quarter. Have a good evening.