According to the 2017 Americas Alternative Finance Industry Report, the alternative finance market across the US, Canada, Latin America, and the Caribbean has grown 23% to $35.2 billion in 2016. The market has benefited from the wide options of crowdfunding, marketplace/peer-to-peer (P2P) lending, and other online alternative finance platforms that have emerged in the industry. One such player is Fort Worth, Texas-based Elevate Credit (NYSE: ELVT).
Elevate Credit’s Offerings
Elevate Credit is a leading player among the alternative lenders in the industry. It provides online credit solutions to consumers with credit scores of less than 700 i.e. non-prime consumers. Elevate uses advanced technology risk analytics to offer financial options to these customers who may, in other cases, not be served by banks or other traditional lenders. It has, to date, originated $4.9 billion in non-prime credit to more than 1.8 million non-prime consumers.
Elevate recently reported its third quarter financials. Its revenues grew 12% over the year to $172.80 million, which fell short of the market’s expectations of $175 million for the quarter. It reported an EPS of $0.01, ahead of the analyst estimates of a loss of $0.01 per share.
Elevate expects to end the current year with revenues of $670-$680 million, a net income of $10-$15 million and an adjusted EBITDA of $90-$100 million.
Elevate Credit’s Market Expansion
As per a BI Intelligence report, the alternate lending sector had a difficult 2016 troubled by weaker investor confidence and decreased demand. But by Q4 2016, the industry was seeing an uptick in unsecured consumer online lending as seen in the graphic below. Elevate Credit is driving the turnaround through market expansion and improved offerings.
During the recent quarter, Elevate expanded the reach of its RISE product to Tennessee. With the addition in Tennessee, RISE is now available in 17 states with Tennessee being the second state where it is available as a line of credit. RISE is Elevate’s state-licensed online lender service that offers unsecured installment loans in 15 states and lines of credit in two states. RISE’s line of credit service was offered in Kansas earlier this year. It offers fast credit approval, flexible loan terms, lower rates than other non-prime lenders, credit bureau reporting, free credit score monitoring, and financial literacy courses.
Recently RISE also crossed two major milestones. The service now has more than 55,000 customers who have improved their credit scores using RISE and more than 20,000 RISE customers are now eligible to receive a reduction in their APR of 50% or more. Elevate has been able to achieve these by reporting on loan activity with a major credit bureau and through its financial literacy tools.
Elevate has also invested in improving its technology platform. Earlier this summer, it announced the launch of Elevate Labs at its new San Diego-based Advanced Analytics Center. The innovation lab in San Diego will leverage advanced technology and analytics talent to experiment, collaborate, and create improved financial offerings.
Its stock is trading at $7.20 with a market capitalization of just over $300.19 million. The stock had listed at $6.50 a share in April this year at a market capitalization of $260 million. The list price was significantly lower than the expected list price of $12-$14 a share. Post the listing, the stock had grown to $9.48 in July this year and had fallen to $5.90 by September of the current year.