Enova International (ENVA) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Our business is highly regulated, and if we fail to comply with applicable laws, regulations, rules and guidance, our business could be adversely affected
2. 02The lending and financing industry continues to be targeted by new laws and regulations in many jurisdictions that could restrict the lending and financing products and services we offer, impose additional compliance costs on us, render our current operations unprofitable or even prohibit our current operations
3. 03Furthermore, legislative or regulatory actions may be influenced by negative perceptions of us and our industry, even if such negative perceptions are inaccurate, attributable to conduct by third parties not affiliated with us (such as other industry members), or attributable to matters not specific to our industry
4. 04If the CFPB elects to prioritize enforcement of a new rule that impacts the consumer lending industry, this rule could have a material adverse effect on our U.S. consumer lending business83% rewritten
5. 05Our advertising and marketing materials and disclosures have been and continue to be subject to regulatory scrutiny
6. 06We have previously ceased business in certain jurisdictions due to regulatory restrictions and, if we are forced to exit key jurisdictions in the future due to regulatory restrictions, this could adversely affect our business as a whole
7. 07If we are forced to exit key jurisdictions due to such concerns, we cannot guarantee that we will be able to find suitably attractive additional business opportunities elsewhere, which could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows
8. 08The failure to comply with debt collection regulations could subject us to fines and other liabilities, which could harm our reputation and business93% rewritten
9. 09Restrictions on our third-party debt collectors or that apply to our attempts to collect debt originated by other lenders may have an adverse impact on our U.S. products and servicesNew
10. 10To the extent that independent sales organization program partners, other third parties or internal sales representatives mislead loan applicants or engage or previously engaged in disreputable behavior, our reputation may be harmed and we may face liability
11. 11We pay commissions to our strategic partners, other third parties and ISOs upfront and generally do not recover them in the event the related term loan or line of credit is eventually charged off
12. 12Any violations of our Code of Business Conduct and Ethics, or the failure to detect any such violations, may cause our business, financial condition or results of operations to be adversely affected
13. 13The use of personal data for credit underwriting is highly regulated, which exposes us to compliance risk and increased costs28% rewritten
14. 14Negative public perception of our business could cause demand for our products to significantly decrease46% rewritten
15. 15to short-term loans or other consumer loan products that we offer that could materially adversely affect our business, prospects, results of operations, financial condition and cash flows and could impair our ability to continue current operationsNew
16. 16Control of the Congress and the executive branch of the U.S. government could have a significant impact on financial services legislation passed in Congress and signed into law
17. 17Current and future litigation or regulatory proceedings could have a material adverse effect on our business, prospects, results of operations, financial condition and cash flows
18. 18Judicial decisions, CFPB rulemaking or amendments to the Federal Arbitration Act could render the arbitration agreements we use illegal or unenforceable35% rewritten
19. 19the same form, and the CFPB cannot issue a substantially similar rule unless the new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original ruleNew
20. 20Over the past few years there have been several litigation and enforcement actions aimed at issuing banks and their non-bank lending partners. These actions have primarily challenged the validity of the issuing bank partner model that is used by many non-banks, including by the Company
21. 21We offer, arrange and/or service online consumer loans to customers in Brazil. New legislation or regulations could further restrict the loan products we offer
22. 22The failure of third parties who provide products, services or support to us to maintain their products, services or support could disrupt our operations or result in a loss of revenue
23. 23Our business depends on the uninterrupted operation of our systems and business functions, including our information technology and other business systems, as well as the ability of such systems to support compliance with applicable legal and regulatory requirements
24. 24Decreased demand for our products and specialty financial services and our failure to adapt to such decrease could result in a loss of revenue and could have a material adverse effect on us
25. 25The CFPB, which regulates U.S. consumer financial products and services, has broad regulatory, supervisory and enforcement powers over providers of consumer financial products and services, such as us, including explicit supervisory authority to examine and require registration of certain providers27% rewritten
26. 26We are subject to impairment risk
27. 27If the information provided by customers to us is incorrect or fraudulent, we may misjudge a customer’s qualification to receive a loan and our operating results may be harmed
28. 28Other countries in which we operate or have operated, including Brazil, and other countries where we intend to operate also have anticorruption laws, which we are, have been or will be subject to87% rewritten
29. 29Failure of operating controls could produce a significant negative outcome, including customer experience degradation, legal expenses, increased regulatory cost, significant internal and external fraud losses and vendor risk
30. 30Increased competition from banks, credit card companies, other consumer and small business lenders, and other entities offering similar financial products and services could adversely affect our business, prospects, results of operations, financial condition and cash flows
31. 31A sustained deterioration in the economy could reduce demand for our products and services and result in reduced earnings39% rewritten
32. 32We may be unable to protect our proprietary technology and analytics or keep up with that of our competitors
33. 33We may be subject to intellectual property disputes, which are costly to defend and could harm our business and operating results
34. 34We are subject to cybersecurity risks and security breaches and may incur increasing costs in an effort to minimize those risks and to respond to cyber incidents23% rewritten
35. 35costly to implement and may lead to widespread negative publicity, which may cause customers to lose confidence in the effectiveness of our data security measuresNew
36. 36Our ability to collect payment on loans and maintain the accuracy of accounts may be adversely affected by computer viruses, electronic break-ins, technical errors and similar disruptions
37. 37If internet search engine providers change their methodologies for organic rankings or paid search results, or our organic rankings or paid search results decline for other reasons, our new customer growth or volume from returning customers could decline
38. 38Failure to keep up with the rapid changes in e-commerce and the uses and regulation of the internet could harm our business
39. 39Growth may place significant demands on our management and our infrastructure and could be costly
40. 40New top-level domain names may allow the entrance of new competitors or dilution of our brands, which may reduce the value of our domain name assets
41. 41Future acquisitions could disrupt our business and harm our financial condition and operating results
42. 42Our U.S. consumer and small business loan businesses are seasonal in nature, which causes our cash flows to fluctuate over the year
43. 43Potential union activities could have an adverse effect on our relationship with our workforce
44. 44Our success is dependent, in part, upon our officers, and if we are not able to attract and retain qualified officers, our business could be materially adversely affected
45. 45Our operations could be subject to natural disasters and other business disruptions, which could adversely impact our future revenue and financial condition and increase our costs and expenses
46. 46We may incur property, casualty or other losses not covered by insurance

Risks Related to our Pending Acquisition of Grasshopper

1. 47Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated, cannot be met, or that could have an adverse effect on us following the consummation of the acquisition of GrasshopperNew
2. 48Failure to complete the Grasshopper acquisition could negatively affect our share price, future business and financial resultsNew
3. 49Potential litigation relating to the Grasshopper mergers could result in significant costs, management distraction, and/or a delay of or injunction against the Grasshopper acquisitionNew
4. 50We expect to incur substantial expenses related to the mergersNew

Risks Related to our Indebtedness

1. 51We have incurred significant indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations under anticipated agreements governing our indebtedness
2. 52The terms of the agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions, which could harm our long-term interests
3. 53engage in certain transactions with affiliates
4. 54unable to compete effectively or to take advantage of new business opportunities
5. 55We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
6. 56Changes in our financial condition or a potential disruption in the capital markets could reduce available capital
7. 57Increases in customer default rates could make us and our loans less attractive to lenders under debt facilities and investors in securitizations which may adversely affect our access to financing and our business

Risks Related to our Common Stock and the Securities Market

1. 58Certain provisions of our restated certificate of incorporation, amended and restated bylaws and Delaware law may discourage takeovers
2. 59The market price of our shares may fluctuate widely
3. 60the other risks and uncertainties described herein
4. 61If securities or industry analysts publish research that is unfavorable about our business, our stock price and trading volume could decline
5. 62We do not anticipate paying any dividends on our common stock in the foreseeable future. As a result, stockholders will need to sell their shares of common stock to receive any income or realize a return on their investment
6. 63Our restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us