David Fisher - CEO Rob Clifton - CFO.

Henry Coffey - Sterne Agee David Scharf - JMP Securities Dan Furtado - Philadelphia Financial Bob Napoli - William Blair Trent Porter - Guggenheim Securities Jason Adler - GMP Securities.

Good day and welcome to the Enova International Fourth Quarter 2014 Conference Call and webcast. All participants will be on listen only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference call to Ms. [indiscernible] Gold. Ms. Gold, the floor is yours ma'am..

Thank you Mike. Good afternoon everyone and thank you for joining us. Enova released results for the fourth quarter of fiscal 2014 ended December 31 2014 today after the market close. If you would like a copy of release, you can access it on the IR section of our website at ir.enova.com.

With me on today's call is David Fisher, Chief Executive Officer and Robert Clifton, Chief Financial Officer. This call is being webcast and will be archived on the Investor Relations section of our website.

Before David begins, I'd like to remind you that the information we're about to discuss today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on current expectations that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. Factors that could cause these results to differ materially are set forth in today's press release and on Form F1 filed with the SEC on December 4, 2014.

Any forward-looking statements should be considered in light of these factors. 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.

Additionally this presentation contains GAAP measures and certain non-GAAP for adjusting financial measures as defined by the SEC. Per SEC requirements you will find additional disclosures regarding non-GAAP measures, including reconciliation of these measures with U.S GAAP in our press release issued today.

As noted in our press release, we have posed supplemental financial information on the IR portion of our website at ir.enova.com. And with that I'd like to turn the call over to David..

Thanks. Good afternoon everyone. And thanks for joining us for Enova's first earnings conference call as a public company. Since some of you may be new to the Enova story, let me start off with an overview of our business and our growth strategy, and then I will review our recent achievements and performance.

Enova is an established technology company with a leading edge technology and online lending platform that addresses a segment of the credit market that is not being served by traditional lenders.

The strength of this online lending platform helped us to achieve our mission to close the world's credit gap by helping hardworking people and fulfil financial responsibilities with fast trustworthy credit.

Our typical customer is an employed working class home owner with kids and some college education who likely had an unfortunate event over the past few years that impacted his or her credit rating and ability to borrow from traditional lending sources.

For example, they could have lost their job during the financial crisis resulting in niche mortgage payments, or had a medical issue that caused the family to fall behind. And now the customer has a short term borrowing need, as the car needs repairs or the kids have a bunch of expenses as they prepare to go back to school in the fall.

By successfully addressing these needs of these consumers, we have processed more than 31 million transactions and funded over $15 billion of loans over the last 10 years. We've been able to achieve this success by leveraging our highly scalable and flexible technology.

A component of this technology is our advanced analytics, which we have continuously enhanced and improved over our 10 year history. Today the decision logic in our analytics platform employs over a 100 proprietary algorithms and runs more than 30,000 rules and models per hour.

Each model is used over thousand history data points ranging from the most obvious to the very unexpected. We also had the advantage of having amassed over 9 terabytes of proprietary consumer behavioral data during the past 10 years.

The combination of this data with our sophisticated algorithm produces high quality underwriting centered on making affordable loans that our customers can repay. Another aspect of our underwriting capabilities that I would like to highlight is the importance of our significant lending history through various markets and credit cycles.

This includes the course the financial crisis that began in 2007. I think it's also important to point out that we utilize our advance analytic capabilities in every step of the loan life cycle, not just a credit decision. This includes product design and pricing, marketing, fraud prevention, servicing and selection.

Our highly scalable and flexible technology has enabled us to expand our product offerings well beyond the short term loans in the U.S where we got our start. At the end of 2014 we operated established products in 35 states in UK, Canada and Australia. We have also powered a program in China and Brazil.

And regulatory compliances always been a focus of ours, whatever we lend. We're licensed in each jurisdiction that requires licensing and abide by industry best practices. We view our competition as primarily traditional brick and mortar lenders who still make up a majority of the industry in most of the markets in which we operate.

Given the busy lives of our typical customers, there are clear advantages to our online model, which allows them to apply for a loan anytime, anywhere in 10 minutes.

Compared with the inconvenience of having to drive through brick and mortar lender, typically with a case in tow, [indiscernible] to having to do it all over again if they forgot a tax submit [ph] at home or not approved. In addition to the convenience our customers really appreciate the privacy and security of applying for a loan online.

With that I will now provide a brief overview of our key accomplishments in 2014 and our strategy for 2015 and beyond. Later in the call Rob Clifton, our CFO will discuss our fourth quarter financial results in details. In 2014 we achieved record profitability, driven by strong double-digit growth in our U.S business.

We also launched four new businesses in four different countries, all while managing through significant regulatory changes in the UK. Accomplishing all of this is in a single year was possible because of our ability to leverage our flexible technology and analytics platform.

This allowed us to rapidly adjust to changes in market conditions and regulatory requirements and grow our business by expanding our product offering into new segments and markets in an efficient low cost manner.

We closed the year with a successful spin off from Cash America into a separate publicly traded company with a strong balance sheet and cash position. For 2015 we expect continued growth in our U.S business driven by the rollout of additional pharma products and the further expansion of NetCredit, our Near-Prime product in the U.S.

In the UK we are focused on optimizing our product offering, now that the regulatory changes there are finalized. The competitive environment there has weakened significantly from a year ago and we hope to be able to show growth in the UK in the second half of the year.

During 2015 we will also analyze the results from the pilots of our four new initiatives and determine which efforts we will ramp and which we will discontinue. The four initiatives we launched last year included a Near-Prime installment loan product in the UK called On Stride. We're encouraged by the results we have seen from this product so far.

Credit performance has been very good and we have seen acquisition cost come down to a level where the unit economics on the loans are now profitable. We want to some spend a little more time capturing data on this product given the longer-terms of the loans.

If these results continue we could be in a position to start meaningfully expanding this product by the end of 2015. The second product we launched in 2014 was a short-term installment loan in Brazil. We have seen extremely strong demand for this product so far.

We are now focused on building a new credit model based on the data we captured to date and further tailoring our operations to confront the Brazilian market. Assuming these efforts are successful we would expect to begin ramping up this product in 2015 also. The third product we launched was a medium-term installment loan in China.

Given the many cultural, regulatory and operating differences in China relative to the U.S., we have purposely chosen to go very slowly with this initiative. As a result I think it will likely take us much of 2015 collection of data through our pilot to make a real determination about the future viability of the product.

That being said, we are optimistic about what we've seen so far and remain excited about the size, the potential opportunity in China. Our final product launch in 2014 was a small business offering in the U.S marketed under the Headway Capital brand. This product is a line of credit targeting businesses with $50,000 to $1.5 million in annual revenue.

We found that our vast experience of underwriting and data analytics is highly relevant in analyzing the credit performance of small businesses, as a small business owner shares many characteristics with our retail customers.

The result has been better than expected credit performance and we are now focused on further automating underwriting and building new acquisition channels. As we look forward, we intend to launch additional new initiatives from our pipeline throughout the year, the first of which is a Thin File line of credit product in the U.S.

We believe that as a whole these efforts will enhance our top-line growth, drive further product and geographical diversification and reduce our regulatory risk. Before wrapping up today I would like to provide a brief regulatory update on the U.S and the UK.

In the UK, as many of you know, the Financial Conduct Authority known as the FCA took over in April from the OFT a former regulator, with a new regulator and a new set of rules for the industry. In addition the FCA finalized rules around the rate cap in the fourth quarter and those rules became effective January 2nd.

We believe we have implemented all necessary changes to our products and underwriting models and our compliance with these rule changes.

Moreover we're in the process of finalizing our application for full authorizations to continue to provide consumer credit product in the UK as we like all other lenders in our space have been under operating interim permission since the FCA took over.

While adapting to the new the rules in the UK required significant changes to our products that had the effect of shrinking the overall addressable market, we appreciate the transparency and focus on better practices brought on by the new regulation and believe this could even be beneficial to us in the long run.

Historically we have had competitors in the UK who had products and business practices we weren’t comfortable with. This put us at a competitive disadvantage. These form of practices also shed a negative light on the entire industry.

Under the new more prescriptive regulation other lenders will now have to rain in their approach, allowing it to compete on a more level playing field. In addition we have already seen reduced competition as many lenders have been unable to comply with the new regulations and were forced out of business. In the U.S.

the CFPB is expected to publish initial guidelines for our industry later this year. A lot of speculation exists as to the changes that maybe forthcoming. We believe that Enova is well positioned for continued success based on our strong business practices, high quality underwriting and leading regulatory compliance.

In addition, we have been through numerous audits, both at the state and CFPB level over the years and we feel confident in our ability to successfully navigate through additional regulatory changes as demonstrated by our recent accomplishments in the UK.

To wrap up, we are very pleased with our results and accomplishments this quarter and in 2014 as a whole. Our ability to substantially increase our profitability on one of our largest markets contracted as competitors exited is a testament to the strength of our business model and product diversification efforts.

We’re also excited about the large opportunity ahead. We plan to continue to invest in our technology and analytics and introduce new products which will further diversify our revenue base and drive sustainable long term growth and profitability.

Most importantly, we have an extremely talented team at Enova, that is prepared for future growth and any challenges we may face along the way. Many companies talk about their top talent but Enova attracting and retaining that talent is one of our core values and the primary reason behind our path and continued success.

A little later I’ll be happy to answer any questions that you may have, but now I’ll turn the call over to Rob Clifton, our CFO, to go over the financials in more detail.

Rob?.

Thank you, David and good afternoon everyone. I will first walk you through our financial and operating performance for Q4 and then review our outlook for the first quarter and full year of 2015 before turning the call over to David for his closing remarks. As David already mentioned, Q4 was another strong quarter for Enova.

We achieved record fourth quarter profitability at a time when revenue contracted due to regulatory changes in one of our largest markets. Total revenue of $194.7 million in the fourth quarter declined from $208.8 million in the same quarter last year.

As we anticipated, international revenue declined due to the impact of the UK regulatory changes primarily does involve a new affordability lending rule. Now that the regulatory changes have been finalized and we have adjusted our products and underwriting models accordingly, we anticipate this revenue to stabilize over the coming quarters. Our U.S.

business, which accounts for two thirds of our total revenue generated very strong results in the quarter. Revenue rose 17% year-over-year to $130.7 million, driven by growth in our installment and line of credit products. We have seen significant customer preference for these products, particularly NetCredit, our Near-Prime installment product.

We expect our U.S. business to remain strong through 2015 as we introduce additional installment products and continue to grow NetCredit. Our continued product innovations have contributed positively to our top line growth and have led to a further diversification of our revenue base.

During the fourth quarter our line of credit offering remained our largest product category at 39% of total revenue. Our installment loan product grew to become our second largest contributor at 32% of total revenue. Meanwhile short term loan revenue declined and now accounts for 29% of total revenue.

With the implementation of the rate cap rules in the UK, we expect our international revenue mix in 2015 to be more heavily weighted towards short-term and installment loan products. Consumer loan balances outstanding continues to be a key driver of our financial performance. We ended the year with a gross consumer loan balance of $424.8 million.

Even with the contraction and gross loan balances in the UK, this represents only a $2.4 million decrease from the prior year ending balance due to good growth in our net credit installment loan portfolio. We saw continued strength in our gross profit margins in the fourth quarter.

Gross profit margin increased to 68.9% from 58.6% for the fourth quarter of 2013. Our U.S. gross profit margin rose 200 basis points to 62.6% while our our international gross profit margin increased significantly to 81.7%, up from 56.3% for the fourth quarter of last year.

Consistent with the third quarter of 2014 the increase in international gross profit margin was driven by stricter underwriting in the UK and was the result of the regulatory changes. In addition to the impacted UK regulatory changes we have seen significant improvements in gross profit margins for all major products in 2014.

We believe a number of factors contributed to these results, including continued enhancements to our underwriting models, a higher mix of returning customers versus new customers, the performance improvement derived from a seasoning installment loan and line of credit portfolios and general, macroeconomic trends.

Also contributing to the strong quarter on a year-over-year basis was a 2% decrease in total operating expenses. Marketing expenses declined 1% due to lower spend levels in the UK, while general and administrative expenses increased 12% for the quarter driven by growth in analytics and technology personnel added during 2014.

Adjusted EBITDA increased 26% from a year ago to $54 million in the fourth quarter, while adjusted EBITDA margin rose more than 700 basis points to 27.9%. Net income increased 14% to $22.5 million in the fourth quarter or $0.68 per diluted share.

Non-GAAP adjusted earnings remained steady at $0.68 per diluted share for the fourth quarter in both years. Our balance sheet continues to be very strong. We ended the quarter with $75 million in cash and a long term debt of $494 million. We also have over $68 million of borrowing capacity on our credit facility.

Moreover, the business continues to generate substantial cash flow which we reinvest to grow our loan portfolio. Free cash flow defined as cash flows provided by operations less cash flows invested in consumer loans and capital expenditures was $117.5 million for 2014 compared to $34.6 million for 2013.

The increase in free cash flow was driven primarily by the contraction of loan balances in the UK. With that I would like turn to our outlook for the first quarter of 2015 and the full year.

As noted in our earnings release for the first quarter 2015 we expect total revenue to be between $165 million and $185 million and adjusted EBITDA to be between $45 million and $60 million for the full year.

For the full year we expect total revenue to be between $750 million and $830 million and adjusted EBITDA to be between $180 million and $240 million. This outlook reflects the significant investments we continue to make in new initiatives, it includes the full impact of the regulatory changes we have seen to-date in the UK.

Consistent with guidance Dave has provided during Cash America’s earnings conference call in October, this guidance is based on several key factors including; one, how the UK competitive landscape evolved and the ultimate size of the addressable market there.

Two, the rate of growth and continued loan performance improvement for our longer term installment loans offered to near prime customers in the U.S. and three, our new initiative launched in 2014 and those planned for 2015 develop.

This guidance is also based on several key assumptions, including that any rule issued by the CFPB this year are not effective under 2016 and that the state legislative and regulatory environments in the U.S. remain stable.

Looking beyond 2015, we expect to see top line growth accelerate and the new initiatives we launched in 2014 begin to gain traction. And with that I’ll turn the call back over to David for his remarks. Thank you..

Thanks Rob. Thank you everyone for joining us today. We look forward to updating you on our progress next year and we will now open the line for questions..

Thank you sir. We will now begin the question and answer session (Operator Instructions) The first question we have comes from Henry Coffey of Sterne Agee. Please go ahead..

Good afternoon everybody, congratulations. It’s a great way to get to the first public quarter going.

Could you give us some insight into what things look like between -- and particularly in the UK, So that between September and December and sort of get an effect of where you stand given the changes in that market?.

Yes, I would say between September and December is really a period of stabilizing, making sure that the changes we made in our products were working and working effectively. We did not spend a tremendous amount of time really trying to build volumes in the UK during that time period and we're still not today.

We're getting comfortable with the new rules and then our products are working effectively with the new rules. As we get deeper into the year we will begin optimizing those products both from an operational standpoint as well as from an underwriting standpoint.

And as we mentioned we see any kind of growth in loan volume in the UK, that we're not happening in the back half of the year..

[indiscernible] but when you look at the opportunity set, do you have any way of quantifying how many people are going to enter, left the business in the UK and how long it's really going to take before they start anything outright?.

Yes, there was about over 100 lenders in the UK a year ago, and I don't have an exact account as of today but dozens have gone out of business and team would be for the authorization process which is really kicking off like right around now.

It is clear that that authorization process is substantial and difficult and is going to be average scrutinized by the FCA and we think many of the existing lenders will not survive that process.

Keep in mind, the FCA, when they came out with new rules anticipated that only three to four lenders -- that's a combination of online and brick and mortar would survive. We think that was kind of overly negative.

We think there will probably a dozen or so but we've seen a couple of dozen already go out of business, but there is certainly more to come..

And then in terms of corporate spending, can you give us a sense of how much money you have spent in the UK, how much more is likely to be spend and what your sort of public company cost looked like this quarter ?.

Yes, in terms of the UK set, we obviously have hired all the right advisors to walk us through this process and make sure that we're compliant with the new rules, so those dollars are in a number [indiscernible] they're not huge. Not like -- most of them are not recurring and they weren't even significant enough for us to break them out here.

So while we've spent real money here, the scope of our overall business highly manageable and largely not recurring. The big recurring expense in the UK is the establishment of our office there.

We do have an office, probably somewhere around a dozen people there by the end of the year, but most of those people are replacing roles that we would have had here or have here in Chicago and they're not incremental. So the expenses is incremental.

So again in total as we look at 2015, the incremental expense for the UK we do not anticipate to be particularly meaningful longer. And so it's not something that we felt the need to breakout or highlight..

David Scharf, JMP Securities..

David, a couple of things. First, just wondering if you can comment a little more on what you're seeing competitively here in the U.S.

and in particular as you kind of build out the near prime product, net credit, what you're seeing from some of the other sort of prime marketplace lenders, some of the early adopters in the online space and whether you see them sort of moving down the credit spectrum potentially?.

Yes. So in U.S. the shorter term higher interest rate product, which haven't seen much new on the competitive landscape will bake new entrants. The business is probably 60% brick and mortar, which is a huge market share opportunity for us.

We talked about the convenience of the online model versus the brick and mortar model and that's probably our biggest focus in the U.S.

In the near prime state there obviously are some new players in the industry, but the traditional lenders and even the peer to peer guys who have not made any entrances into that near prime space at all -- the banks actually seemed to be getting further and further away from focusing on truly climb in high prime borrowers who we really think that's traded a large opportunity for us to move up market into that near prime space without competing with the banks in the larger traditional lenders in any way.

And that's a market opportunity that we think as very substantial and could generate some meaningful growth for that net credit product..

Got it. And as we think about the channels that how they're developing, I know it's been a couple of year process to bring more of the lead generation internal, direct marketing and less use of outside lead gen.

Can you just talk about where you are in that evaluation and ultimately, when you get to the point where the vast majority of your customer acquisition is done internally, how we ought to be thinking about marketing spend?.

That's a great question. So if you look at the business five years ago, it was almost all lead gen driven. And even if you look a couple of years ago, two, three years ago, we're still probably two-thirds lead gen business. But that’s now flat to where it's two-thirds internally driven and only one-third is lead gen.

I would say for that now number is stabilized somewhat. I think it will come down a little bit this year, not dramatically, unless there is significant regulatory pressure on the lead generators which actually could be likely, but that’s the big unknown.

I think at some point both state regulators as well as the CFPB are likely to focus much more significantly on that channel which could significantly impact that lead gen business, which for us is actually a very good thing. The lead gen providers -- they are largely our competition.

We do work with them obviously because they do provide business to us, but when we look out and we're bidding on TV or bidding on keywords online, or SEO they are our competition out there and to the extent they have to comply with the same kind of rules that we need to comply with and level that playing field, it really provides a nice opportunity to further ramp up our internal marketing and direct marketing channel.

So we feel like we've really built out those capabilities now to the extent we are able to generate two-thirds of our business internally and to the extent there is any disruption for those lead channel I think we're very well positioned..

Got it. And last question, you referenced among the contributing factors to improving credit and in gross margins is sort of an increasing mix of more returning customers. So in the U.S.

are you seeing the bulk of returning customers basically accessing the same product or are you seeing a mix shift among returning borrowers where they might be borrowing larger amounts at longer durations?.

We see a little bit of everything depending on the current profile of the borrowers.

We've certainly seen customers whose credit has improved, moved from our short-term products to our net credit product, and stay towards an elder rollout and installment and line of credit products, we've seen high preference for those products from existing customers.

So it’s a little bit dependent on a profile and that’s why we would like to offer as many products as possible in as many states as possible to meet those needs of those customers because they do all differ. .

Next we have Dan Furtado of Philadelphia Financial. .

Most of my questions have been answered. I just have two brief ones. One can you have an expectation of a loss provision in the U.S.

versus UK this year?.

I would say generally the UK we -- once the growth in loan originations kind of kicks in, we certainly expect the margin -- gross profit margin to moderate. So I would expect that the Q3 and Q4 2014 margins to be repeated for fiscal year 2015. On a U.S.

standpoint as we continue to rollout additional installment products, I would generally expect some moderation from what we've had in 2014 but generally I would still expect strong TP performance in the U.S..

Could you comment -- since you've given guidance for the next fiscal year, could you kind of say that range of loss provisions are in those guidance things for both the U.S.

and UK?.

I don’t think we're going to give guidance that specific. .

And my second question is when you look at your stock versus OnDeck, how would you compare yourselves, because you both seem to be online lenders targeting an unreserved population. .

I think our businesses are very similar. We both are balance sheet lenders. We both have online lending models and use advanced analytics to address those customers. If you look at for example our -- some of their lending metrics and compare it to a NetCredit, our near prime product, they look extremely similar.

So again they focus a little bit more -- they focus more on the small business states, we focus more on the consumer states. Although we do have headway our new small business product. But other than the slight difference in customers, the businesses are actually very, very similar. .

And could you just talk brief over your small business product [indiscernible] them?.

Yes, it’s a line of credit -- it’s a line of credit product up to six months. We are attracting customers all through direct marketing in that business.

We're not using any brokers, providers to go after that business and that kind of combination is a direct marketing and offering the line of credit versus kind of installed longer to more typical in that space where the merchant has advanced products which are more typical in that space we think is a nice entry for us. .

And then your '15 numbers how big is that business going?.

We're not breaking out our new initiatives at this time, but that business is so brand new to us and it’s not going to be too significant in 2015..

The next question I have comes from Bob Napoli of William Blair.

David, welcome back to the public markets. I was going to ask about the small business that Jordan was just hitting on there, but have you hired a team in small business or what is the strategy around building that business..

With all of our new initiatives we set up a dedicated team. We're given dedicated states. We treat it almost like a startup. But they get to leverage all of our experience and our technology platform. We talked about similarities and differences on to deck.

One of the differences is we've been doing this for 10 years and have a very large team and lots of resources that our new initiatives can leverage.

And so we really try to strike that nice balance where they get to leverage all that experience and expertise of Enova as a whole, but kind of separate them and segregate them as little start up enterprise to really give them the freedom to go up and build those businesses quickly.

And that’s all we've seeing with headway and all of our other new initiatives as well..

Okay and then do you have any I think thoughts around selling portions of your loans -- retaining servicing kind of the investor marketplace model that on the [indiscernible]..

Sure it's a great question. So historically the high velocity of our shorter term loans just made that not necessary. They cash flow fast enough, they would redeploy that money and the yield is strong enough that there really wasn’t any advantage to moving them off balance sheet.

As we move into some lower yielding products, whether it's the small business initiative China, or net credit or other near time products, that is something we will look at going forward. We don’t have the need to do it yet we saw a plenty of lending capacity on our balance sheet.

Again those businesses continue to grow whether it hold on sales of securitization market. I think there is some nice opportunities where the attractive yield on those products could make them very viable product in those markets..

And just last question, what is your target leverage ratio? How do you think about this size of the balance sheet?.

So right now we have a net leverage to 1.7. I think we've got plenty of opportunity to increase that leverage. I think over time I see our debt in equity leverage potentially approaching 100%..

Next with Trent Porter, Guggenheim Securities.

Just a couple of quick questions. One of the comments on your anticipation revenue stabilizing in the coming quarters, was it -- that’s happening quicker than I anticipated. So I was just hoping you could build around your assumptions there a little.

In installments for example, in the second quarter when you reported -- I think your originations were declining at about 14% because of the affordability rules offset by the imprisonment [ph] provision. So I was hoping you could just characterize that a little bit..

The affordability rules went into effect in July and they went into effect all at once. So one day you are -- so on that date all your loans had to be under the new rules. And so given the shorter term nature of a lot of our loans, that rolls through your model relatively quickly.

And so when we talk about stabilization, really what we have been talking about in the third quarter, and then again today is kind of volume origination stabilizing and we really saw that in the third quarter, that originations weren’t dropping significantly more. They were more stabilizing and we saw that again in the fourth quarter.

And then that with the origination stabilizing -- you'll then see that roll through the rest of the income statement and the balance sheet with the old loans getting paid off and then the new loans coming on. We talked about growth in the back half for the year.

Obviously the growth will come first from the originations in the loan volume and then the later effect of that will be an increase in revenue..

And then next one is the -- your forecast, one of the assumptions with the CFPB rules don’t become effective until 2016 and I think most of us agree with, but would you sort of start to adapt as soon as you get the proposed rules coming out in midsummer which would still have an impact?.

Yes we will obviously -- so when we get a proposed rule, we'll start working on contingency plans and implementation right away. But we don’t think the proposed rules are likely to come out until the back half -- maybe in the back quarter of the year, maybe the fall.

October, November is the last [indiscernible] with implementation not likely till mid-2016 or later. Again the latest estimate by far maybe not even till 2017.

So we really wouldn’t expect -- there is chance that those rules don’t have a significant impact on the business at all, but even if they do, we certainly don’t see any material impact from those rules until well into 2016, if not later. .

Just quickly on that, you talked -- the estimates that you're seeing in terms of when they're out, where are you seeing those estimates? Is this terms of someone authoritative like the CFPB or just?.

Not from the CFP themselves. You hear a bunch of different industry sources, press releases. There's an article in the Wall Street journal not just long ago. You're just trying triangulate from various sources. And for us, we're just focused on running our business in the Internet.

We feel confident about our business factors [ph] in the U.S today, feel confident our ability to adapt to any new regulation and to do it quickly and better than our competitors. And so again we see the information, we try to have an idea of it, but it's not [indiscernible].

Our focus is on running our business as best as we can and when we see the rules we'll analyze them and figure out what we need to do adapt to them. .

Next we have Mike [indiscernible] Partners. .

So just -- I guess going back to the UK, and is it fair to say that the deceleration that you guys have had in the last couple of quarters -- is the worst behind you? In other words do you expect that to basically flatten out in the first half of 2015 and then as you talk about growth in the back half.

Are you thinking along the lines of a new sort of growth rate, sort of not consistent with what it had been in the past or do you think it's possible that you could return to the growth rates that you had previously?.

Yes, so in terms of the loan origination volume in the UK, we do think it's stabilized more now and the worst is behind us. And then -- as for the growth rate, we do see the opportunity for significant growth in the UK going forward. Predicting exactly where that growth rate will be is difficult right now.

It would be -- it can be easier once we see where competition falls out, as we get deeper in this authorization process. But the market is still a large and viable market. There is going to be reduced competition and so we still think there is that real opportunity in the UK..

Got it. And then I guess on the NetCredit products in the U.S., it sounds like you guys are getting good growth there.

Just curious I don't know if you guys have ever disclosed how big that is relative to your overall portfolio? Maybe you could give us some sense of how to think about that in terms of maybe how big it could get or relative profitability to the core products that you have? Any color on that would be great?.

Sure. So it has guidance meaningful to us. 2014 was a very nice year for that business. We really became confident in the unit economics. We had enough data with enough history to feel good about significantly ramping up that product.

For longer-term installment products, we wanted to make sure we had a clear view of not only on the thought curve over time but also the prepayment curve which is a meaningful part of the economics of that product. We just needed more history to get. Now -- and once we have that history we did start ramping it up pretty significantly.

At the end of the year the AR balance was somewhere around the $100 million and that's a number that can grow very meaningfully from there, that we're seeing really nice demand for that product. We have good unit economics there and we've just scratched the surface in terms of our marketing effort. .

Great. And then I guess lastly, just curious given what's going on within the overall -- the P2P marketplace lending -- just wondering if you are seeing any challenges in terms of finding talent -- sort of the need you guys have for quantitative folks and obviously the [indiscernible] from Silicon Valley as well.

Are you getting any pressures in terms of in terms of [indiscernible] company, these are a different space than you guys but based in your neck of the woods, are you seeing any sort of challenges on that front?.

Well I think thankfully, look, there is always a battle for best talents and when you want the best of the best, your always -- no matter what market environment you're in -- you're going to have to work hard to get them.

But we certainly have the advantages of being in a big city of Chicago that really having technology revolutionary now and it's really strong focus of the city in developing that top talent.

We also have a lot of talent coming out of the financial markets and the financial technology companies that have not gone as well over the last several years and especially analytics talent, that's been a nice source for us recently. So it's always worked but we have great platforms that people like love to work on.

We invest extremely heavily in our analytics tools and our analytics technology, the platforms are underlie, the models that these super smart people build and really creating great tool set in a great environment and it helps us track that talent.

For example we spent in 2014 a couple of million dollars on our analytics platform, just a tool that our team gets to use help them build and use the newest and greatest modeling techniques out there and our commitment and our willingness to spend that kind of money on those tools really helps us attract talent and very few companies are willing to do that.

So we’ve been really successful in attracting that talent and we expect to be going forward..

Henry Coffey, Sterne Agee..

I just had a follow on. I think last week -- two days ago when I talked to CFPB with their release guideline, I would have said this month is February, rolling [ph] in March and now you’re hearing later. [Indiscernible] nine month comment period that they have to go through. So I know you sort of talked about it but I thought we could revisit it.

Since your expectation is that we won’t hearing from them for -- so when March?.

Again, this is all speculation and you’re trying to triangulate for multiple sources but the latest that we’re hearing and yes we’ve given a whole lot [indiscernible]. It's sometime in the spring.

So likely you issue some form of white paper in conjunction with putting together their small business panel which they’re required to do, connects with any rule making. And then their actual published rules likely won't come out into much later this year.

So white we’re hearing the summer -- lately we’ve been hearing more like fall and then again final rules could be sometime in mid to late 2016 with possibly effectiveness in 2016 but again more recently we’re hearing possibly not until 2017. But it is a lot of speculation. Again it’s not a big focus of ours.

We're keeping our heads down, running our business, knowing that whenever they do come out we think we’re very well positioned to adapt to them..

And there's not a lot I know in the UK there was a lot dialog and my impression is -- you can correct me if I’m wrong.

Is that this is not a situation with a lot of dialog going on? They are sort of just churning inside trying to figure out what to do?.

The U.S. and UK processes are different. In UK there is a lot of dialog before the rules are published and very little after. In U.S. that process is very different. There is not a lot of dialog before but the comment period and the way they must take into account those comments is much different in the UK.

In the UK they ask for comments but they don’t do anything with them really and they’re not really required to do a lot with them. In the U.S. there is I think much more attention paid to the comments made to the rules both by us and by others and so there is a much longer period for comments in the U.S. to take that into account.

I think that’s where you'll see more of the dialog..

[Indiscernible] RBC Capital Markets..

I’d like to ask a couple of questions on sort of a sector approach to the various business lines. First with regard to the UK and the implementation of the FCA, rate caps and rollover caps that started January 2nd in contest to what you’ve been operating under? And then going to the U.S. I’ve got some questions.

So first if we can go to the UK, so you have had three business lines. You had short-term loans which is -- they are QuickQuid. You have the line of credit and QuickQuid Flex I believe for your Web site is going to be wrapped up because it perhaps doesn’t qualify. And then you’ll have the On Stride Near-Prime product that you’ve discussed.

Then -- so my understanding is in the UK you have the pounce to pocket. I don’t have precise and I don’t know if you ever supply precise RAC [h APRs for those three products but I believe that the QuickQuid and they put 1,000 plus from getting that correctly. I think we’re near there.

It’s going to be knocked out because all these I believe are going to be held to 100% cap? On Stride is Near-Prime. I think your site says it 25% to 89%. Again I am just looking at Web site information. This could be wrong and that should qualify. And then flex is gone.

So trying to get some granularity, in terms of the attributable EBITDA that you had UK, ex-UK I have been anxious to look at the fourth quarter and drive through it, but basically if I look at your ex-UK EBITDA for the third quarter was $20 million and added [indiscernible] again in the fourth quarter, it was 48 million prior to -- that was stating and hitting a run off.

Based on the information I have, if I understand this correctly it seems to me that most of the legacy product lines you have or the current product lines are not going to be allowed, certainly not at the rates they have historically been used to drive these results in UK.

So I'm wondering if we need to be potentially flattening this spread out, unless you can give us an idea what you think you can make on eligible products in the UK? And then further if we go to the U.S. as you look at the CFPB, again none of us know this will be implemented.

But if you look at what’s done in Colorado under UTIS [ph] who is brought in to head this division at CFPB, if we get any type of look out of the CFPB that is in line with what you did in Colorado, what has been championed by some advocates like you [ph], we might be talking about maybe a 100 or -- 100%, 120% something, 150 effective API, and maybe it’s going to be -- since you can't to get publicly get rates, maybe it will be a qualifying basis like educational loans for profit today.

So what is your ATR for the division lines you have in the U.S.? What do you see near prime charging at an average ATR?.

So Jean, maybe we can spend some time with you offline because, it seems like you’re missing a few large banks in both markets and I don’t really understand the business. So for example the 100% cost of credit in the UK is for the terminal loan. It’s not an annual APR. So can charge a 100% cost of credit for a two week loan.

Obviously the APR on that would be much, much higher. And so for example our QuickQuid product in the UK survives almost entirely impact under the new rate capital rules as does our installment loan product in the UK.

So if you look at our client in the UK in the third quarter and into the fourth quarter, the rate cap rules we don’t think again have a huge impact on either the volume or on the profitable of those products. Then, in the U.S. and again we’re happy to spend some time offline providing more of an overview of the entire industry to get you up to speed.

The CFPB can't impose rate caps. They’re specifically prohibited from doing so in their charter. And so we operate in 35 different states in the U.S., each with their own set of rules and their own set of rates, and that really provides a nice set of diversification to any potential regulatory changes..

Next we have Jason Adler of GMP Securities..

I just want to focus in on cash flow for the fourth quarter a little bit. I think about the bridge from EBITDA to cash flow from operations and free cash flow. And EBITDA was obviously up year-over-year and sequentially but it looks like cash flow was little softer than the comparable quarters.

Obviously a lot going on in the quarter with the spin out and the shift in mix.

Can you help me understand a little bit about what was different in this quarter and what are expectations for cash flow should be in 2015 given guidance and their expectations for mix going forward?.

Yes. So the cash flow is very, very strong. We did have a lot of payments to make in Q4. We had an interest payment -- the significant interest payment to make on our bonds as well as we terminated our long term incentive plan.

So most of the contraction in the UK balance was earlier than this Q4, we had a little bit there but then also December does have some uptake in loan demand in the U.S. and the UK. Its seasonal increases. So it does effect the overall cash flows. But when you look at our free cash flow, still a very strong for the full year..

Okay. Thank you. I guess also turning to some of the pilot programs, can you talk a little bit about the competitive landscape in Brazil and China and what are the questions that need to be answered by these programs before you hit the gap and look to ramp them up..

Yes, good question Jason. So in Brazil as far as we can tell we are the only Company providing a 100% online loan and someway that’s great, because it provides kind of wide open landscape. In other ways it's scary going in because you don’t know why no one else is providing a 100% online loan.

But as I mentioned in my prepared remarks, we’ve seen extremely strong demand in Brazil. And as long as we can get comfortable with the loan performance and tweak some of our operational practice to conform to some of the differences between the Brazilian market and the U.S. market, we see a large opportunity.

Brazil is a country of 200 million people with a growing middle class, a very stable government, a surprisingly advanced banking system. It really takes a lot of the right practice for us in terms of great market opportunity.

So we’re only about six months in to that product and so we still have some work to do, but given the demand, we could see that product ramping up fairly quickly as we move forward -- as we move into 2015.

China, obviously a huge market, 1.2 billion people, again growing middle class with very fast rising income levels and clearly becoming very much consumer oriented society.

If you spend any time in China, we see that there is a vast amount of consumption going on from that growing middle class and that creates a great opportunity for credit a country where there hasn’t historically been a ton of credit. Now there are -- in a country the size of China there are lot of people trying to address this market.

Nobody we have seen had a tremendous amount of success so far, no one is doing it in purely online automated way.

But the market is very, very different from anywhere else we’ve operated and it’s why as I mentioned we’re going much, much slower there to make sure we understand the regulatory environment, we understand the operational differences, we understand the different credit profile of the customers over there.

But we like what we’ve seen so far and we certainly love the potential opportunity over there, in terms of the size of the overall market..

That will conclude our question and answer session and today’s conference call. We would like to thank the management team for their time today, and thank you all for attending today’s presentation. At this time you may disconnect your lines. Thank you and have a great day everyone..