Elevate Credit Announces Second Quarter 2022 Results

Elevate Credit Announces Second Quarter 2022 Results

FORT WORTH, TX - August 9, 2022 - Elevate Credit, Inc. (NYSE: ELVT) ("Elevate" or the "Company"), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the second quarter ended June 30, 2022.

"The first half of 2022 has largely met our expectations from both a top-line and bottom-line perspective," said Jason Harvison, Elevate CEO. "Beginning in late June, we, like many others in our space, have noted softer credit due to inflationary pressures on non-prime Americans. Given this changing market environment, we will take a more cautious approach to growth in the second half of the year."

Second Quarter 2022 Financial Results

• Revenues: Revenues increased 39% during the second quarter of 2022 to $117.6 million, compared to $84.5 million for the second quarter of 2021. The increase in quarterly revenue is primarily attributable to higher average combined loans receivable-principal resulting from growth in all products year over year.
• Combined loans receivable - principal: Combined loans receivable - principal totaled $532.4 million at June 30, 2022, a sequential quarter increase of 4% from $511.3 million at March 31, 2022 and an increase of 33% from $399.3 million at June 30, 2021. The fair value of the combined loans receivable-principal balance was $585.9 million, representing a fair value premium of 10% which is down from the pro-forma fair value premium of 13% at June 30, 2021 and flat with the 10% fair value premium at December 31, 2021 and March 31, 2022. The higher portfolio fair value premium in the prior year is due to a more mature portfolio resulting from reduced marketing and new loan origination activity in 2020 to early 2021 resulting from the impacts of COVID-19.
• Credit quality: Past due balances remained consistent at 10% at June 30, 2022 and at December 31, 2021. Net charge-offs as a percentage of revenue during the second quarter of 2022 were 55% compared to 31% during the second quarter of 2021. The increase in net charge-offs as a percentage of revenue is primarily due to the heightened volume of new to former customers added to the platform in the second half of 2021.
• Net income (loss): Net loss for the three months ended June 30, 2022 totaled $(6.5) million compared to a net loss of $(3.0) million (pro-forma net income of $3.5 million) in the second quarter of 2021. Fully diluted loss per share for the second quarter of 2022 totaled $(0.21), a decrease from $(0.09) per fully diluted share a year ago. Pro-forma fully diluted earnings per share for the second quarter of 2021 totaled $0.10 per fully diluted share. See "Non-GAAP Financial Measures" for details on the pro-forma fair value adjustments reflected in our condensed consolidated statements of operations.
• Adjusted EBITDA: Adjusted EBITDA totaled $12.3 million in the second quarter of 2022, down from $19.4 million, pro-forma, in the second quarter of 2021. The Adjusted EBITDA margin for the second quarter of 2022 was 10.5%, down from 22.9%, pro-forma, in the prior-year second quarter.

Year-to-date 2022 Financial Results

• Revenues: Revenues increased 39% during the six months ended June 30, 2022 to $241.9 million, compared to $174.3 million for the six months ended June 30, 2021. The increase in revenue is primarily attributable to higher average combined loans receivable-principal resulting from growth in all products year over year.
• Net income (loss): Net loss for the six months ended June 30, 2022 totaled $(20.5) million compared to net income of $9.7 million (pro-forma net income of $4.5 million) for the six months ended June 30, 2021. Fully diluted earnings (loss) per share for the first half of 2022 totaled $(0.65), a decrease from $0.27 per fully diluted share a year ago. Pro-forma fully diluted earnings per share for the first half of 2021 totaled $0.12 per fully diluted share. See "Non-GAAP Financial Measures" for details on the pro-forma fair value adjustments reflected in our condensed consolidated statements of operations.
• Adjusted EBITDA: Adjusted EBITDA totaled $10.4 million for the six months ended June 30, 2022, down from $36.4 million, pro-forma, from the prior year period. The Adjusted EBITDA margin for the six months ended June 30, 2022 was 4.3%, down from 20.9%, pro-forma, in the first half of 2021.

Liquidity and Capital Resources

The Company paid down its Victory Park Management LLC ("VPC") debt facilities by approximately $25 million in the first quarter, while drawing down a net $12.5 million on its debt facilities in the second quarter of 2022 to help fund loan growth. The Company's use of its debt facilities with VPC and Park Cities Asset Management LLC to fund the portfolio growth during the past year with incremental borrowings at a cost of 9% on the VPC facilities has resulted in an overall weighted average rate on the facilities of 9.10% as of June 30, 2022, down from 9.61% at June 30, 2021. Total debt at June 30, 2022 was $517.5 million compared to $353.0 million at June 30, 2021. The Company had $74 million of cash available at the end of the quarter on June 30, 2022.

During the second quarter of 2022, the Company purchased $2.0 million of common shares (760.1 thousand common shares) under the Company's previously approved common stock repurchase program. As of June 30, 2022, the Company has purchased roughly 5% of common shares outstanding at the beginning of the year and approximately 36% of all common shares issued and outstanding since August 2019 under this common stock repurchase program.

Conference Call

The Company will host a conference call to discuss its second quarter 2022 financial results on Tuesday, August 9, at 4:00 pm Central Time / 5:00 pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-306-7075 (domestic) or 1-212-231-2921 (international) and requesting the Elevate Credit Second Quarter 2022 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate's Investor Relations website at https://investors.elevate.com/corporate-profile/.

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on August 23, 2022, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 22020081, or by accessing Elevate's website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "likely" and other words and terms of similar meaning. The forward-looking statements include statements regarding: our more cautious approach in executing our measured growth strategy throughout the second half of 2022 and continued improvements in profitability in the second half of the year. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the effect of the COVID-19 pandemic and the current macroeconomic conditions, including high inflation and the resulting impact on our borrowers to replay their loans, on the Company's business, financial condition and results of operations; the Company's limited operating history in an evolving industry; the Company's ability to grow revenue and maintain or achieve consistent profitability in the future; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company's current operations unprofitable or even prohibit the Company's current operations; scrutiny by regulators and payment processors of certain online lenders' access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; uncertainties in the current economic environment, including potential increased inflation and a likely higher interest rate environment; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's most recent Annual Report on Form 10-K, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About Elevate

Elevate (NYSE: ELVT), together with the banks that license its marketing and technology services, has originated $10.3 billion in non-prime credit to more than 2.7 million non-prime consumers to date. Its responsible, techenabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers' good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate's platform powers a suite of groundbreaking credit products includes RISE, Elastic, Today Card and Swell. For more information, please visit http://corporate.elevate.com.

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