ENVA - NYSE

Good day, and welcome to the Enova International Third Quarter 2025 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 for Enova. Please go ahead.

Thank you, operator, and good afternoon, everyone. Enova released results for the third quarter 2025 ended September 30, 2025, this afternoon after market close. 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'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 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'd like to turn the call over to David.

Thanks, and good afternoon, everyone. I appreciate you joining our call today. We are pleased to report another great quarter, highlighted by solid loan growth and strong credit metrics across our portfolios, driven by our nimble online-only business model and well-diversified portfolio. Before we dive into the quarter, as a reminder, last quarter, we announced that Steve Cunningham, our CFO, will take over as CEO on January 1, at which time I will transition to the Executive Chairman role. I've committed to remain as Exec Chair for at least 2 years. Scott Cornelius, our Treasurer, will succeed Steve as CFO. Steve and Scott are preparing well for their new roles, and we expect a seamless transition with the continuation of our focused growth strategy and consistent performance. Now turning to the quarter. In Q3, we once again generated strong growth, supported by stable credit and significant operating leverage. Thanks to our diversified product offerings, the sophistication of our machine learning models and outstanding team, we've been able to consistently deliver significant portfolio growth while maintaining stable credit, resulting in strong financial results. Third quarter originations increased 22% year-over-year and 9% sequentially to almost $2 billion. The strong origination growth produced a 20% year-over-year increase in our combined loan and finance receivables to a record $4.5 billion. Small business products represented 66% of the total portfolio and consumer 34%. Revenue increased 16% year-over-year and 5% sequentially to $803 million in the third quarter. SMB revenue increased an impressive 29% year-over-year and 7% sequentially to a record $348 million, and our consumer revenue increased 8% year-over-year and 4% sequentially to $443 million. Overall, the stability of our customer base continues to underpin our growth as credit quality is solid across the portfolio. The consolidated net charge-off ratio for the quarter was 8.5% compared to 8.1% last quarter and 8.4% in Q3 of last year. Despite some noise in the macro environment, the underlying trends for our customers continues to be positive. The job market remains healthy with unemployment rates staying historically low at 4.3% as of August, and wage growth continues to outpace inflation for our target customers. In addition, August consumer spending data showed a meaningful uptick, reinforcing steady household demand. When looking at external data, it's helpful to keep a couple of key factors in mind. First, our consumer customers in some ways are always in a recession. As a result, they are adept at managing variabilities in their finances. Second, these customers tend to have jobs with more fungibility in terms of being able to move between companies. This can lead to less volatility in their earnings over time. Looking back to our Q2 earnings call, we discussed how early in the spring, we had seen some minor elevated default metrics in one of our consumer products. As we mentioned, in response, we tightened our credit models for that product, particularly for new customers. Because we're able to adjust so quickly, we avoided any significant impact to our consumer business. Taking swift action like this to adjust our models is routine for us. We're able to do this because of the rapid performance feedback we get as a result of the design of our products and the sophistication of our credit models. It's something we do all the time, hundreds of times per year, and this goes both ways, whether we're making adjustments to tighten credit or to expand it. So as expected, following the adjustment to this one product, credit performance has quickly returned to normal. In fact, credit in that product now exceeds our expectations with some of the lowest early default metrics we have witnessed. As a result, we've begun rapidly reaccelerating its growth. So looking forward to Q4, we expect to see consumer origination growth rates accelerate sequentially and credit metrics continue to improve. Also contributing to our stable financial performance through market fluctuations are the benefits of having a diversified portfolio. Having operated in the nonprime space for decades, it's common to see short-term fluctuations in demand and credit in any one product or customer segment. In addition to being well diversified across our SMB and consumer businesses, within each of those, we offer a wide variety of products, adding multiple layers of diversification across our portfolio. This structure gives us the flexibility to allocate resources towards the strongest opportunities and have the confidence to moderate exposure where risks are elevated. With this in mind, we continue to see compelling opportunities within our SMB business, which had another fantastic quarter in Q3. Our leading brand presence, scale, solid credit and low levels of competition again resulted in solid demand and credit performance. Originations for SMB increased 11% sequentially and 31% year-over-year to nearly $1.4 billion in Q3. Insights from internal and external sources reflect solid underlying trends for small businesses. In conjunction with Ocrolus, we released the eighth iteration of our small business cash flow trend report earlier this week. This offers key insights into the state of small businesses and highlights ongoing trends observed over the past year. Small business confidence is high as tariffs remain manageable and the economy and in particular, consumer spending remains strong. Small business growth expectations stayed strong in Q3 with 93% of owners anticipating moderate to significant growth over the next year. And approximately 3/4 of small businesses were from nonbank lenders with nearly 40% of those in business reporting being denied by traditional banks. Further, external data aligns with these observations. Small business sentiment reached a new high in the third quarter with the MetLife and U.S. Chamber of Commerce Small Business Index climbing to 72, its highest reading ever and up from 65.2% last quarter, signaling strong optimism across the sector. Driven by the operating leverage inherent in our online-only business, growth in EPS again outpaced both origination and revenue growth in Q3. Adjusted EPS increased 37% year-over-year, primarily as a result of our strong growth, efficient marketing and a lower cost of funds. Before I wrap up, I'd like to spend a few moments discussing our strategy and outlook for the remainder of 2025 and beyond. We've carefully designed our business with a thoughtful unit economics approach that has enabled us to operate profitably for more than 2 decades. This is through many different environments, including downturns in consumer spending, interest rate hikes, surges in inflation, not to mention the Great Recession and a global pandemic. During this time frame, we've successfully navigated periods where the unemployment rate was more than double where it is today. And our business is better prepared than ever to withstand changes in the macro environment as our technology and analytics continue to be more sophisticated and our balance sheet is stronger than ever, while our portfolio has become more diversified. I said this last quarter, but I've never been more excited about Enova's future. We have an incredibly experienced team, a strong foundation, a time-tested playbook and industry-leading products, all clear signs of the opportunity ahead of us. Steve and I share a common vision that our focused growth strategy will continue to steer our path forward. We continue to adapt and innovate and remain committed to producing sustainable and profitable growth while meeting the needs of our customers and driving shareholder value. With that, I would like to turn the call over to Steve Cunningham, our CFO, who will discuss our financial results and outlook in more detail. And following Steve's remarks, we'll be happy to answer any questions you may have. Steve?

Thank you, David, and good afternoon, everyone. As David noted in his remarks, we're pleased to deliver another solid quarter of top and bottom line results that were in line or better than our expectations, with strong growth in originations, receivables and revenue, along with solid credit, operating efficiency and balance sheet flexibility. Turning to our third quarter results. Consistent with our expectations, total company revenue of $803 million increased 16% from the third quarter of 2024, driven by 20% year-over-year growth in total company combined loan and finance receivables balances on an amortized basis. Total company originations during the third quarter rose 22% from the third quarter of 2024 to nearly $2 billion. Revenue from small business lending increased 29% from the third quarter of 2024 to $348 million as small business receivables on an amortized basis ended the quarter at $3 billion or 26% higher than the end of the third quarter of 2024. Small business originations rose 31% year-over-year to $1.4 billion. Revenue from our consumer businesses increased 8% from the third quarter of 2024 to $443 million as consumer receivables on an amortized basis ended the third quarter at $1.5 billion or 9% higher than the end of the third quarter of 2024. Consumer originations grew 4% year-over-year to $590 million. As David mentioned, the slower consumer growth this quarter was intentional to ensure we were maintaining solid credit quality across the portfolio. For the fourth quarter of 2025, we expect total company revenue to be 10% to 15% higher than the fourth quarter of 2024 as a result of strong SMB growth and a reacceleration of growth in our consumer portfolios. 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. Our consolidated credit performance continues to demonstrate that our diversified product offerings and discipline around our unit economics enable consistent results across different operating environments. The third quarter consolidated net revenue margin of 57.4% was in line with our expectations and reflects continued solid credit performance. The consolidated net charge-off ratio for the third quarter was 8.5%, flat to the third quarter of 2024 and reflects our typical consumer seasonality and continued strong small business credit performance. Sequential stability and year-over-year improvement in the consolidated 30-plus day delinquency rate and a stable consolidated portfolio fair value premium reflect our expectation of stable future consolidated portfolio credit performance. Small business credit performance remained strong. Sequentially and compared to the third quarter of 2024, the net charge-off ratio, the net revenue margin, fair value premium and 30-plus delinquency rate for our small business portfolio all improved and reflect continued and expected stable credit performance. Consumer credit also remained solid. Following our typical seasonality, the consumer net charge-off ratio rose sequentially to 16.1% for the third quarter and while higher than the year ago quarter, remained in our expected range. The consumer net revenue margin and credit metrics for the third quarter were influenced primarily by mix shifts and the rate of originations growth on the heels of consumer portfolio adjustments that we discussed last quarter. Those adjustments and our overall balanced approach to growth meaningfully reduced the year-over-year change in the consumer 30-plus delinquency rate compared to last quarter. And as David noted, we exited the third quarter with the lowest ever initial defaults on weekly vintages on the consumer product we adjusted, allowing us to accelerate sequential growth opportunities into the fourth quarter. Additionally, during the quarter, year-over-year consumer installment originations grew at the fastest rate that we've seen in several years as we saw higher demand from existing customers for refinancing and debt consolidation. This is another example of how the breadth of our consumer products and credit segments, combined with our disciplined approach to unit economics, enables us to navigate varying operating environments and generate consistent consolidated results. The fair value premium on our consumer portfolio at the end of the third quarter was flat to last quarter and remained consistent with levels observed over the past 2 years, indicating a stable risk return profile and strong underlying unit economics for our portfolio. Looking ahead, we expect the total company net revenue margin for the fourth quarter of 2025 to be in the range of 55% to 60%. This expectation will depend upon portfolio payment performance and the level, timing and mix of originations growth during the quarter. Now turning to expenses. Total operating expenses for the third quarter, including marketing, were 31% of revenue compared to 34% of revenue in the third quarter of 2024 as we continue to see the benefits of our efficient marketing activities, the leverage inherent in our online-only model and thoughtful expense management. Our marketing spend continues to be efficient, driving strong originations growth and was in line with our guidance range for the quarter. Marketing costs as a percentage of revenue were 18% compared to 20% for the third quarter of 2024. We expect marketing expenses to be around 20% of revenue for the fourth quarter, but will depend upon the growth and mix of originations. Operations and technology expenses, which were driven by growth in receivables and originations were 8% of revenue for the third quarter, similar to the third quarter of 2024. Given the significant variable component of this expense category, sequential expenses and O&T costs should be expected in an environment where originations and receivables are growing and should be between 8% to 8.5% of total revenue. Our fixed costs continue to scale as we focus on operating efficiency and thoughtful expense management. General and administrative expenses for the third quarter increased to $40 million or 5% of revenue versus $39 million or 6% of revenue in the third quarter of 2024. While there may be slight variations from quarter-to-quarter, we expect G&A expenses in the near term should be between 5% and 5.5% of total revenue. We continue to deliver solid profitability and strong returns on equity this quarter. Compared to the third quarter of 2024, adjusted EPS, a non-GAAP measure, increased 37% to $3.36 per diluted share, delivering an annualized third quarter return on equity of 28%. We ended the third quarter with $1.2 billion of liquidity, including $366 million of cash and marketable securities and $816 million of available capacity on debt facilities. Our cost of funds declined to 8.6% or 15 basis points lower sequentially and nearly 100 basis points lower than the third quarter of 2024 as a result of lower short-term interest rates and strong execution on recent financing transactions. Continuing our track record of strong capital markets execution that reflects our solid credit performance. During the third quarter, we upsized our corporate revolver by $160 million to $825 million, extending the final maturity to 2029, reduced the cost by 25 basis points and expanded our bank lender group. Our balance sheet and liquidity position remains strong and 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 investments in our business and share repurchases. During the third quarter, we acquired 339,000 shares at a cost of $38 million, and we started the fourth quarter with share repurchase capacity of approximately $80 million. Before wrapping up with our fourth quarter expectations, I'd like to touch on our valuation. Enova has delivered strong and consistent results over many years and operates a highly scalable online-only model with more diversification than any nonbank specialty finance company. Since our acquisition of OnDeck 5 years ago, we've not only maintained our strong profit margins, we've done so while cutting our consolidated net charge-off rate in half. Our demonstrated world-class risk management capabilities and approach to unit economic decisioning has driven our differentiated financial performance and return on equity as well as our ability to finance the business at market-leading spreads. To put this in perspective, Enova has never reported a quarter of negative adjusted EPS. And over the past 10 years, has delivered $1.8 billion of adjusted net income and grown annual adjusted EPS at a compound average annual growth rate of approximately 20%. Over that same time, we reduced our financing costs by hundreds of basis points from lower credit spreads that are a direct result of our portfolio credit performance and predictability. Despite our demonstrated operating model advantages and unmatched financial performance as a public company, we remain frustrated by a persistent valuation gap. We continue to trade at discounts to the S&P 600 and Russell 2000, the financial components of each of those indexes and to other specialty finance lenders that have less consistent performance and profitability. In fact, at the end of the third quarter, Enova traded at a similar price multiple on 2026 consensus adjusted EPS estimates but similar to 2016 and 2017 forward PE ratios when we were a much smaller consumer-centric company. We continue to 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. You should expect that we will continue our focus on growth with financial consistency and we'll continue to lean into our capital returns through opportunistic share repurchases. To wrap up, let me summarize our fourth quarter expectations. For the fourth quarter, we expect consolidated revenue to be 10% to 15% higher than the fourth quarter of 2024, with a net revenue margin in the range of 55% to 60%. Additionally, we expect marketing expenses to be around 20% of revenue, O&T costs to be between 8% to 8.5% of revenue and G&A costs to be between 5% and 5.5% of revenue. These expectations should lead to adjusted EPS for the fourth quarter of 2025 that is 20% to 25% higher than the fourth quarter of 2024. 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 third quarter results reflect the strength of our diversified product offerings and the ability of our team to consistently deliver strong growth, revenue and profitability while maintaining solid credit. Our operating model has now delivered 6 consecutive quarters of year-over-year adjusted EPS growth of at least 25% or more, and we remain confident in our ability to generate meaningful financial results for the remainder of 2025 and beyond. And with that, we'd be happy to take your questions. Operator?

[Operator Instructions]. The first question today comes from David Scharf with Citizens Capital Markets.

Congratulations again. Dave and Steve, you're the latest. What's becoming a long line of lenders that have reported very stable, positive and constructive credit commentary this earnings season. So I'm going to leave the credit questions to some others to ask about. I was curious, maybe 2 more granular things. One is just on kind of capital actions. This is, I think, similar commentary on how you perceive the stock's valuation as you provided in the last couple of calls. Is there any kind of update you can provide us on whether you would ever consider seeking additional covenant relief to return potentially even more capital in terms of buybacks or whether a dividend is potentially something the Board would consider?

Yes. I think everything is on the table. Certainly, both of those over time as well as other ways of utilizing excess cash. We have plenty of excess capital, other ways of using excess capital to maybe further diversify the businesses and increase our valuation. I think as Steve said very well in his prepared remarks, given the incredibly strong track record of the performance of our business, how much it's evolved over the last 7 or 8 years just in terms of stability, diversification, balance sheet strength to be trading at the same PEs we were back then is obviously not where we think the value of the business is. So yes, opportunities to increase the buyback. The returns on our buybacks over time has been very, very, very strong. Certainly, a dividend at the right time, although that's, I think, usually a better tool when the stock is more fully valued. And then are there places -- other places in the market where we could utilize our capital.

Understood. Understood. Maybe as a follow-up, on the marketing side, there have been quite a number of quarters now where at least as a percentage of revenue, marketing dollars have come in below your guidance. And I think you guided to 20% last quarter, it came in at 18% again. And at some point, trying to figure out what's a feature versus a bug. And are you seeing anything about the composition of either by channel or just percentage of repeat borrowers or just maybe it's the mix shift towards more SMB. But is there anything that would kind of lead you to tell us structurally the operating model is potentially more profitable than we've been sort of modeling and that 20% is maybe too high a ceiling?

Yes. I mean, look, the model continues to get more profitable, and I'll give a lot of credit to our marketing and business teams who are continuing to get more efficient on the marketing and acquisition and conversion side, those all tie together. But some of it's also just a confluence of events. If you kind of go back to Q4 of last year, volume came really, really late in the quarter. And so we probably underspent because we didn't see the volume earlier in the quarter. Q1, there was just a tremendous amount of volume that we never would expect to see in Q1. So we're probably underspending again. And then we had a lot of excess revenue from the strong Q4 and Q1 kind of increasing the denominator for Q2 where actually the spend was actually kind of pretty near where we would have thought it was going to be. And then as we talked about in Q3, we pulled back a bit on the consumer side just while we were letting the credit settle in the -- that one consumer product. So as we look for Q4 as we're now accelerating growth, especially on the consumer side. Now the credit, as I mentioned on my prepared remarks, credit looks incredibly good right now, not just solid. I mean it looks like incredibly good at the moment. We're going to lean into that accelerate growth. And look, a lot can change between now and the end of the year, and it's hard to predict the holiday season. But we would -- we're certainly expecting higher levels of spend in Q4.

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

Question on the growth outlook. I mean you obviously seem very optimistic on the consumer originations going into Q4. Looking at Q3, consumer installment, as you noted, was very, very strong, a little bit of decline in consumer line of credit originations. I presume that might be reflective of the tightening and kind of the wait-and-see approach that you took from Q2 to Q3. Just was that the case? And do you expect kind of a mix of growth between the 2 products going into Q4, like a reacceleration in line of credit?

Yes. I mean, very observant view, Bill, so I'll give you credit for sure. Steve guess that someone is going to pick that up and he was right. So yes, that was the product. And yes, that is where we're expecting the most acceleration going into Q4. Again, we're filling demand here. So we don't always know for sure. But that is certainly our expectation on the consumer side that we'll see a reacceleration of that line of credit and a mix shift in favor of line of credit. Not that there's any issue with installment right now, there's not. But there's just more -- there's more acceleration opportunities in line of credit given the slight pullback we had intentionally in Q3.

Okay. And I assume this might relate to that as well, but the change in fair value on the consumer loan portfolio little bit of an uptick in Q3 as well. I assume was that related to some of the adjustments that were made.

Yes. I mean if you think about the change in fair value line item in terms of dollars, there's 2 components. One of them is the back book sort of running its course, which the fair value premium was very stable. So all of that was as expected as we just sort of continue to mature the back book. The bigger difference would have been the slower originations growth overall on the consumer portfolio, which would have been a negative in the change in fair value line item for the quarter.

The next question comes from Vincent Caintic with BTIG.

I guess I'll ask the credit question. But -- so your credit trends have been strong, both in SMB and in consumer. And I was just wondering, I guess, with the applications you're getting in or maybe just kind of a broad industry outlook, if you have any of where you might be seeing or where there might be any sort of deterioration that might be out there, like perhaps are you getting more applications in certain areas where you might be declining more or anything where you might be seeing that?

I mean, look, we adjust credit hundreds of times a quarter. So there's always something here or something there, but there's no significant pockets at all. our subprime business has some of the best credit metrics we've seen in a long, long time. And so our near prime book business has like some of the best credit metrics we've seen in a long, long time. So it's broad-based. I know there's been a lot of questions about it because of subprime auto and maybe 1 or 2 vintages and some of upstarts older securitizations. But I mean, those -- that kind of one vintage doesn't mean much of anything. And subprime auto, we've seen many, many times over Enova's history is just not correlated to what we do. It's so much based on asset prices and supply and demand. So no, we are seeing top to bottom consumer and small business incredibly good credit. And it's not surprising. The economy remains strong. The job market remains strong. Inflation has moderated. There's no reason to expect that it wouldn't be. So yes, no areas that we're really concerned about at all right now.

Okay. Great. And I guess relatedly, on the competitive front, so I know maybe banks aren't your direct competitors, but some of the failings that maybe have happened amongst other lenders, particularly in commercial side, there's maybe some of those lenders are now relooking at their portfolios and so forth and maybe tightening up a bit. So I'm kind of wondering if you're seeing that and if in turn, that allows you to take more share and maybe that's part of the marketing opportunities that you're seeing. If you could talk about that.

Yes. I mean -- yes, sure. On the small business side, we continue to see banks being extremely conservative, and that's created an enormous opportunity for us over the years. And we don't -- we haven't seen that change at all. I mean, if anything, we've seen more conservatism from banks, which has obviously been a huge positive for us there. And then on the consumer side, there haven't been any new entrants into that space in a long, long time. And when we see kind of people on the fringes, more prime lenders try to dip their toes into near prime, we see them pull back very, very quickly. It's just that they're just different businesses. And they're not good at lending above 36%, no different than we would not be good at lending at 12% or 18%. It's just not what we do. We're not going to compete with Capital One, and I think they've been pretty smart about not trying to compete with us. So I think as we've talked about, the competitive dynamic is good for us, and we continue to not see many changes there.

The next question comes from Kyle Joseph with Stephens.

Just in terms of growth, obviously, it's been weighted towards the small business side of things and kind of you guys mentioned kind of the credit blip you saw in the spring. But yes, touching on competitive dynamics, and then I think you mentioned that you expect consumer to reaccelerate. Just give us a sense for kind of the competitive dynamics between the 2.

Yes. So look, we don't purposely push growth in one versus the other. As you've heard us talk about, it's all based on our unit economics framework. We have excess capital. So where we can originate loans above our ROE targets, we will and we let the market dynamics play out. And I would say the variances in the growth rates between the 2 businesses over the last 2 years have been almost all market and credit driven. So in 2023, for example, consumer outgrew small business by a fair amount. This year, small business is outgrowing consumer. That's fine, but that's great. This quarter, you might see that revert, especially with the reacceleration on the consumer side. And next year, we don't know. What we do know is we have a lot of good products across a pretty wide spectrum of the non-prime credit base. And so if one market is stronger than the other, we'll lean into it and take advantage of that diversification. But -- so that's kind of the longer term and shorter term, like I said, we are pushing pretty hard on the consumer side right now, pushing hard relative for Enova, obviously. I mean we're always very balanced between growth and credit. You've never seen us get out ahead of our skis, and we're certainly not going to do that now. But we just -- credit looks so good on the consumer side that we're certainly leaning in.

The next question comes from Alexander Villalobos with Jefferies.

Congrats on the results. My question was more on the cap market side and just interest expense. I know you guys generate a ton of cash. And is there anything on the bond side or just cap market side where you guys can, in the future, kind of lower the interest expense a little bit more and kind of get a little more push on the EPS side from there?

Yes, for sure. So we've talked about the expectation that we're going to see lower benchmark rates in the short end of the curve, which is where we tend to fund. So that we expect over the near term over the next year or 2, that's going to be a tailwind for us. But -- more importantly, just the performance of the portfolio has allowed us just to continue to bring our spreads down. You saw that I mentioned in my commentary. Every transaction here over the last year or so, we've talked about the decline in the credit spreads over the benchmark because of that performance. So I think there's clearly some opportunity between those 2 things to capture some of the tailwinds in the capital markets to help support growth in EPS.

The next question comes from John Hecht with Jefferies.

So I'll only ask one question, but it's kind of, I guess, a broad question. I mean you've got rates declining. It sounds like very good consistent current trends. I think the competitive environment continues to be favorable for you, but then we're high prepayment activity, which in some cases, looks like it's tied to just excessive amounts of liquidity in the system. So the point is like things seem good, but they are on the margin kind of moving targets. How do those things affect your -- kind of the way you think about near-term and intermediate term strategies?

Yes. It was a little hard to hear some of that with the background noise. I think -- look, competitively, you talked about, there's not much new. I think you said -- you asked about prepays, like elevated prepays. Look, in the subprime and near prime space, that just doesn't move the needle much. I mean it's just -- our customers need the cash. And so we don't tend to see that a lot. So again, look, we don't get overly confident in Enova. It's just something we don't do. But the model, the products are looking really strong and stable right now. We're not seeing many cracks. We're not seeing many changes other than improving credit. Our customer bases look very solid kind of across any metric that we can look at. I mean when we think about prepayment rates haven't changed, average loan sizes are staying steady. We're not seeing customers being more or less price sensitive. It just -- it's a very stable environment right now. Again, we're fully cognizant that, that can change, and we're watching all the metrics every day. But right now, things are looking very stable.

The next question comes from John Rowan with Janney.

Obviously, you spent a lot of time talking about current credit, given obviously what's going on in the news. But maybe just touch on quickly what you think about 2026, in particular, think about what's going on with tax laws and tips and overtime and changes to child care tax credit and some of those other programs. Just give us an idea of maybe how much of your consumers are impacted by some of those large changes in tax policy.

Yes. Well, I think the estimates are for higher tax refunds next year, which should help with credit. And then, look, I think this year, we saw what we thought was going to be one of the bigger impacts, which was the resumption of payments on student loans and the resumption of collections on student loans. And we've been able to navigate with that with no problem at all. And I think some of the tax -- some of the tax changes next year kind of pale in comparison to that in terms of magnitude and if anything, are likely to be helpful. So again, we you don't know until it actually plays out, but it doesn't seem like it's going to be an issue for us at all.

[Operator Instructions]. The next question comes from Moshe Orenbuch with TD Cowen.

Most of my questions have actually been asked and answered. But I was sort of hoping to kind of just -- and maybe the idea of you talked about leaning in kind of on the line of credit side of the consumer and the consumer being significantly stronger in Q4 than Q3. I guess given your approach, does that mean that you will have less origination on the small business side? Or does it mean that we should just think about you kind of investing just incrementally heavily in Q4?

Completely incremental. As you know, we have plenty of excess capital. I think we had about $1 billion of excess liquidity at the end of Q3. So we have plenty of capital to invest in both in Q4. And SMB looks really good as well. I mean they had just killer Q3, and that momentum has continued into Q4. So -- the only reason we talked -- haven't talked more about SMB is because it's just doing well and it's continuing to do well. And we'll -- yes, we have plenty of capital to keep that business going full speed. And then -- so it's really just that the change is really just on the consumer side where now that we're accelerating growth again, we should see stronger growth in the consumer book.

Got you. Okay. And the -- and this may be just our forecast, but you bought back a little less stock in Q3 than we had in our model. Given that you've got this kind of extra kind of faster growth expected in Q4, should we think that buybacks would be similar to Q3? Or more like prior quarters.

Moshe, so as we've talked about, we have the capital and liquidity to do all of it organic growth as well as buybacks. And our buyback is we run an opportunistic program. So we still bought 60% of the capacity this quarter, but you also remember, we touched all-time high for a couple of weeks, which at those levels, we would still be buying, but at a lower level than we would, say, for example, right now. And in those quarters where we were buying nearly all of the capacity, we were trading off of where we are today. So you should expect us to follow that approach. We have about $80 million available in Q4, which is -- we kept some of that powder dry in case there's volatility as we go forward from here, and we'll continue to be opportunistic and buy as much as we can against that program and continue to grow the business as fast as we can against our focused growth -- balanced growth approach.

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