Enova International (NYSE:ENVA) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.
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Summary
Enova International Inc reported strong Q1 2026 results with a 33% year-over-year increase in originations to $2.3 billion and a 28% increase in the portfolio size to $5.3 billion.
Revenue grew by 17% year-over-year to a record $875 million, driven by 37% growth in SMB revenue and 3% growth in consumer revenue.
The company highlighted solid credit performance with a consolidated net charge-off ratio of 7.6%, the lowest since Q2 2023.
Enova plans to continue leveraging advanced technology, including AI, to improve customer experience and operational efficiency.
The pending acquisition of Grasshopper Bank is expected to close in the second half of 2026, with anticipated EPS accretion of over 25% post-synergy realization.
The company raised its full-year outlook, expecting a 20% increase in originations and at least 25% growth in adjusted EPS for 2026.
Full Transcript
OPERATOR
Good day and welcome to the Inova International first quarter 2026 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press Star and then two. Please note this event is being recorded. I would now like to turn the conference over to Lindsey Savaris, Investor Relations for inova. Lindsey, please go ahead.
Lindsey Savaris (Investor Relations)
Thank you operator and good afternoon everyone. Enova International Inc released Results for the first quarter 2026 ended March 31, 2026 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 [email protected] with me on today's call are Steve Cunningham, Chief Executive Officer and Scott Cornelis, 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 Steve, 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 10K, quarterly reports on Forms 10Q and current reports on Forms 8K. 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, Inova 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 Steve.
Steve Cunningham (Chief Executive Officer)
Thank you Lindsey and good afternoon everyone. I appreciate you joining our call today. Our first quarter results marked a great start to the year. Strong originations, growth and solid credit across our portfolio once again drove outstanding financial results results that were in line or better than our expectations and highlight the power of our balanced growth strategy and our experienced team's ability to drive differentiated and consistent performance by leveraging our diversified product offerings, scalable operating model and advanced risk management capabilities. Our results also highlight the resiliency of our consumer and small business customers. Despite recent market volatility and concerns about potential impacts from geopolitical or domestic policy issues, first quarter originations increased a healthy 33% year over year to nearly $2.3 billion. As a result of the strong originations growth, the portfolio increased 28% year over year to nearly $5.3 billion. Small business products representing 70% of our portfolio at the end of the quarter and consumer products accounting for 30%. Strong demand and solid credit performance enabled us to be more aggressive with our marketing than we typically see in the first quarter of the year as we leveraged our sophisticated technology and analytics to meet this demand while maintaining attractive unit economics. Looking ahead, we'll continue to opportunistically lean into marketing to meet demand that delivers strong returns and meets our unit economics hurdles with strong quarterly portfolio growth, revenue increased 17% year over year to a record $875 million in the first quarter. Profitability metrics grew even faster as adjusted EPS increased 30% from the first quarter of 2025. Driven by strong credit and our significant operating leverage, SMB revenue increased 37% year over year to $418 million and our consumer revenue increased 3% year over year to $446 million, both quarterly records. In addition to our strong growth this quarter, credit metrics across the portfolio reflect stable or improving performance, with the consolidated net charge off ratio for the first quarter falling both sequentially and year over year to 7.6%, our lowest consolidated quarterly net charge off rate since the second quarter of 2023. Looking at our consumer business year over year, growth in originations accelerated to 10% as we continue to lean into the strong demand and stable credit that we discussed last quarter. As expected, credit metrics for the consumer portfolio were stable or improved both sequentially and year over year. Our SMB business continued to deliver remarkable growth and stable credit as our leading brand presence scale and strong competitive position drove 42% year over year growth in originations to a record $1.7 billion. Our S&B portfolio has grown 37% over the past year and remains intentionally well diversified across geographies and industries. In addition, the SMB net charge off ratio remained in a tight range consistent with the past two years. Our performance this quarter and external data reflect a stable and resilient macroeconomic environment. Despite recent concerns about rising energy costs as a result of the Iran war, the most recent Federal Reserve Beige book released last week continued to highlight increases in economic activity across most districts. In addition, our Most recent Small Business Cash Flow Trend Report released in conjunction with oculus found that 93% of small businesses expect moderate to significant growth over the next year, which is consistent with prior surveys. Similarly, the most recent NFIB Small Business Economic Trends Report indicated that the number of small business owners rating the health of their business as excellent or good was mostly steady in the April ADP National Employment Report noted that small businesses have been the engine for hiring across the country for the second consecutive month. Supported by a stable labor market and growth in real wages consumption, consumers continue to spend and participate in the economy, March unemployment rate ticked down to 4.3%, new and continuing weekly unemployment claims remained relatively low and manageable, and March hourly earnings increased 3.5% compared to a year ago. While March consumer confidence remains stable, consumer sentiment as well as small businesses expressed concerns about the future impact of the the Recent Spike in gasoline prices during our more than 20 year operating history, we have successfully managed our business during several energy price spikes, including as recently as 2022. During that energy shock, we observed that significant gas price spikes don't necessarily translate into higher spending, as today's consumers have more methods to manage gas price spikes than in the past with the advent of more fuel efficient autos, electric vehicles, ride sharing services and on demand delivery. A review of the electronic bank statement data we collect across our consumer businesses support this Prior to the start of the Iran war, our consumer borrowers were spending roughly 2% of income on gas. Since then, even with a meaningful increase in gas prices, we've seen only a small increase in spending on gas relative to income as consumers adapt their behavior to higher costs at the pump. This trend is similar to what we observed during 2022 when geopolitical issues sparked an even sharper rise in gas prices that persisted for many months during a period of much higher overall inflation.
Steve Cunningham (Chief Executive Officer)
Importantly, during that period in 2022, we didn't observe material impacts to our consumer or SMB originations or credit performance as a direct result of the energy price spikes. Notably, historically, we have seen that demand for our products typically increase as customers look to bridge temporary cash flow gaps that could arise from spending due to transitory higher prices. Before I wrap up, I'd like to spend a few moments discussing our strategy and key focus areas for the remainder of 2026. We've demonstrated a long track record of consistent and profitable lending while navigating a wide range of economic environments. We thoughtfully diversified and built our operating model to be resilient in any economic environment and are confident in our ability to continue our success by following our focused growth strategy and by leveraging our diversified product offerings, advanced technology and analytics and disciplined unit economics approach.
Steve Cunningham (Chief Executive Officer)
One key to our success for many years has been the extensive application of machine learning models, automation and other advanced technologies including applied and generative AI across our company to remain nimble, improve the customer experience, manage risk and increase efficiency. This tech forward and innovation mentality is ingrained in our culture and it's how we've approached our work every day for many, many years. While we've taken a more understated approach to highlighting our innovation compared to others, preferring to let the results speak for themselves, make no mistake that we've embraced the opportunities to apply generative AI across our organization to defend and extend our competitive advantages and enable our teams to move faster with powerful insights while working smarter and more efficiently. Finally, we are excited about our combination with Grasshopper bank later this year. Since our last update, we've continued to make great progress and remain engaged in a constructive dialogue with both the OCC and Federal Reserve as we progress through the typical application process.
Steve Cunningham (Chief Executive Officer)
Internally, our teams are deep into integration planning and we are highly encouraged by the readiness we are building to ensure we hit the ground running on day one to deliver on the significant synergies for geographic expansion of our existing products and lower funding costs from Grasshopper's deposit businesses. As a reminder, we expect net synergies related to the transaction to drive adjusted EPS accretion of more than 25% once the synergies are fully realized in the first two years post closing we continue to anticipate closing the transaction during the second half of this year.
Steve Cunningham (Chief Executive Officer)
To wrap up. We're pleased with the strong start to the year and based on what we're seeing today, we're raising our outlook for the year which Scott will describe in more detail. We believe our diversified product offerings, nimble machine learning, powered credit risk management capabilities, talented team and solid balance sheet position us well to continue to drive sustainable and profitable growth this year and beyond. With that, I'd like to turn the call over to Scott Cornelis, our cfo, who will discuss our financial results and outlook in more detail.
Steve Cunningham (Chief Executive Officer)
And following Scott's remarks, we'll be happy to answer any questions you may have.
Scott Cornelis (Chief Financial Officer)
Scott thank you Steve and good afternoon everyone. As Steve noted in his remarks, we're pleased to deliver another solid quarter of top and bottom line financial performance.
Scott Cornelis (Chief Financial Officer)
We started 2026 with strong growth in originations, receivables and revenue along with solid credit, operating efficiency and balance sheet flexibility Turning to our first quarter results, total company revenue of $875 million increased 17% from the first quarter of 2025, exceeding our expectations, driven by 28% year over year growth in total company combined loan and finance receivable balances on an amortized basis.
Scott Cornelis (Chief Financial Officer)
Total company originations during the first quarter rose 33% from the first quarter of 2025 to $2.3 billion. Revenue from small business lending increased 37% from the first quarter of 2025 and $418 million as small business receivables on an amortized basis ended the quarter at $3.7 billion or 39% higher than the end of the first quarter of 2025. Small business originations rose 42% year over year to $1.7 billion. Revenue from our consumer businesses increased 3% from the first quarter of 2025 to $446 million as consumer receivables on an amortized basis ended the first quarter at $1.6 billion or approximately 8% higher than the end of the 1st quarter of 2025. Consumer originations grew 10% from the 1st quarter of 2025 to $559 million. For the 2nd quarter of 2026, we expect total company revenue to be 15% to 20% higher than year over year. This expectation will depend on 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 Consolidated credit performance for the first quarter was solid with year over year improvement in the net charge off rate, the 30 plus day delinquency rate and a stable fair value premium. The consolidated net revenue margin of 60% for the first quarter was at the higher end of our expected range and reflects continued solid credit performance across our portfolios. The consolidated net charge off ratio for the first quarter of 7.6% declined 100 basis points from the first quarter a year ago as the consumer net charge off ratio decreased to 14.3%, 90 basis points lower than the first quarter last year while the small business net charge off ratio remained stable at 4.6%. These results underscore the strength and consistency of our credit risk management and the quality of our originations. Importantly, we expect future credit performance to remain stable as demonstrated by the year over year stability in the consolidated 30 plus day delinquency rate and the consolidated fair value premium which at 115% remained at levels we have seen over the past two years indicating a stable risk return profile and strong unit Economics Looking ahead, we expect the total company net revenue margin for the second quarter of 2026 to be in the 55% to 60% range. This expectation will depend upon portfolio payment performance and the level, timing and mix of originations growth during the second Quarter now turning to expenses, Total operating expenses for the first quarter, including marketing, were 36% of revenue compared to 33% of revenue in the first quarter of 2025. As Steve noted, our marketing spend continues to be efficient, driving strong originations growth. Marketing costs increased to 22% of revenue, or $189 million, compared to 19% of revenue, or $139 million, in the first quarter of 2025. We expect marketing expenses to be around 20% of revenue for the second quarter, which will depend upon the growth and mix of originations, operations and technology. Expenses for the first quarter increased to 8.7% of revenue, or $76 million, compared to 8.4% of revenue, or $62 million, in the first quarter of 2025, driven by growth in receivables and originations over the past year. Given the significant variable component of this expense category, sequential increases in ont costs should be expected in an environment where originations and receivables are growing and should be around 8% to 8.5% of total revenue going forward. Our fixed costs continue to scale as we focus on operating efficiency and thoughtful expense management. General and administrative expenses for the first quarter were $48 million, or 5.5% of revenue, compared to $42 million, or 5.7% of revenue in the first quarter of 2025. The current quarter includes $2.7 million of one time deal related expenses associated with the pending Grasshopper acquisition. Excluding these items, G and A expenses were $45 million, or 5.2% of revenue, reflecting continued operating leverage and disciplined expense management. While there may be slight variations from quarter to quarter, we expect G and A expenses in the near term will be around 5% of total revenue excluding any one time cost. Our balance sheet and liquidity position remain strong, giving 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 opportunistic share repurchases. We ended the first quarter with approximately $1.1 billion of liquidity, including $436 million of cash and marketable securities and $654 million of available capacity on our debt facilities, continuing our track record of strong capital markets execution during the first quarter we upsized four of our secured consumer and small business warehouse facilities by $377 million at existing terms, providing additional capacity to support our growth. Our cost of Funds for the first quarter was 8.2%, down from 8.3% in the fourth quarter, reflecting strong execution in recent financing transactions. During the first quarter we acquired approximately 110,000 shares at a cost of approximately $16 million. We continue to believe there remains additional upside in our valuation given our track record of consistent growth and earnings, our expectations for 2026 and the significant future opportunities associated with the Grasshopper acquisition. With that in mind, we will continue stock repurchases opportunistically while ensuring we are prepared to close the Grasshopper bank acquisition and transition to a bank holding company later this year. Finally, we continue to deliver solid profitability this quarter. Compared to the first quarter of 2025, adjusted EPS, a non GAAP measure, increased 30% to $3.87 per diluted share. To wrap up, let me summarize our near term expectations for the second quarter. We expect consolidated revenue to be 15% to 20% higher year over year with a net revenue margin in the 55 to 60% range. Additionally, we expect marketing expenses to be around 20% of revenue, ONT costs of around 8 to 8.5% of revenue and G&A costs around 5% of revenue with a more normalized tax rate. These expectations should lead to adjusted eps for the second quarter of 2026 that is 20% to 25% higher than the second quarter of 2025. For the full year we expect growth in originations compared to the full year of 2025 of around 20%. We expect that the resulting growth in receivables with stable credit and continued operating leverage should result in full year 2026 revenue growth similar to originations growth and adjusted EPS growth of at least 25%. Our second quarter and full year 2026 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. As a reminder, our 2026 financial expectations do not assume any contribution from the pending acquisition of Grasshopper bank which as Steve noted, we continue to expect to close in the second half of 2026. We are confident that the demonstrated ability of our talented team combined with our world class technology and analytics have us well positioned to adapt to an evolving macro environment and continue to generate meaningful and consistent financial results. Our resilient online only business model diversified product offerings, nimble machine learning, powered credit, risk management capabilities and solid balance sheet support our ability continue to drive profitable growth while also effectively managing risk. And with that, we'd be happy to take your questions. Operator thank you.
OPERATOR
We will now begin the question and answer session. To ask a question, you may press Star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and then two. At this time we will pause momentarily to assemble the roster. And the first question will come from Moshe Orenbuck with TD Cowan. Please go ahead.
Moshe Orenbuck (Equity Analyst)
Sorry, I was on mute there. Thanks very much. I guess for starters, you know, you've got, you know, very strong results overall but has, you know, kind of tilted a little bit certainly from an asset growth standpoint towards small business. Could you talk a little bit about, you know, your originations in both consumer and small business and related to the respective marketing costs like where, you know, where were those higher marketing costs incurred and how it drove, you know, the originations and you know, whether there's an outlook for that consumer or any reversal, if you will, of that, you know, kind of disparate growth between the two businesses.
Steve Cunningham (Chief Executive Officer)
Hey Moshe, thanks for the question. So I think, let me make a couple of comments. Number one, I think our SMB business has been growing, you know, plus 20% now for every quarter over the past two years. Sometimes it's more than that like we've seen over the past couple of quarters or sometimes a little bit closer to that. So pretty, pretty consistent, pretty steady. I don't think there's anything remarkable to talk about as it relates to marketing. Our marketing remains very efficient and again we lean into to that marketing where we see opportunities to drive really good growth. The strong unit economics on the consumer portfolio. If you just take a look at the year over year trends in the consumer book, we've been re accelerating growth as we've talked about now over the past couple of quarters. To recall back middle of last year, we were making sure that we had credit where we wanted it. There was a product that we slowed that slowed our overall consumer growth down a bit. But that's been picking up. The pace has picked up and in particular if you look at our consumer products, you can see that our consumer installment growth has been very healthy now for quite some time on a year over year basis. And the location product year over year growth has been accelerating over the past several quarters as we expected, I think you should expect to continue to see the consumer year over year growth to accelerate as we look back, you know, into some of the quarters last year where we had purposely slowed down. So I think, you know, I expect we'll continue to see healthy SMB growth, but I also think we'll continue to see that acceleration in consumer. So the disparity, I think we should, you know, all things being equal and with the strong operating backdrop, I think you'll see that disparity diminish. And similar to what I mentioned on the marketing for SMB, the marketing on our consumer side, our teams do a great job of identifying the channels that deliver the best marketing value for the growth that we can achieve against that unit economics framework. So I feel very good about the quarter, the growth that we were able to print. And as Scott highlighted our outlook, we nudged up a bit what we think we will be able to do with what we see today with our growth.
Moshe Orenbuck (Equity Analyst)
Got it, thanks. And clearly you have one of the better lenses into kind of repayment given the shorter term that you've got. Just talk a little bit about what you're seeing both on the consumer and small business side. And if you can talk about, you know, obviously we see the delinquency rates at the end of, at the end of March, but if you can kind of talk about whether that's continued into April and just talk about the repayment side of things.
Steve Cunningham (Chief Executive Officer)
Yeah, I mean, I think the results speak for themselves. You know, at the end of the quarter, as you mentioned, credit looks really, really strong. I mean, SMB has been operating in a tight range for charge offs for quite some time. Our consumer charge offs are operating what I would say towards the lower end of the range that we typically would see for a first quarter. And so, you know, a few weeks into the, to the second quarter, we're pleased with what we're seeing as it relates to the portfolio performance and the demand, regardless of the, you know, the volatility that ends in the headlines that are out there. You know, sometimes the what people are actually doing versus the backdrop and the headlines is very different. And we're pretty encouraged with what we're seeing as we move into the second quarter.
Moshe Orenbuck (Equity Analyst)
Thanks very much.
OPERATOR
The next question will come from David Scharf with Citizens Capital Markets. Please go ahead.
David Scharf (Equity Analyst)
Hi, good afternoon. Thanks. Thanks for taking my questions as well. Steve, maybe just kind of following up on Moshe's comment about kind of the mix of originations. Can you just remind us, you know, as we Think about the unit economics between consumer and SMB. Obviously they're approaching sort of 50, 50 revenue at this point. But are you still, should we be indifferent as an investor outside looking in? Should there basically be an indifference
Steve Cunningham (Chief Executive Officer)
as it relates to the asset mix? Are the unit level returns risk adjusted pretty much the same? Are you underwriting to kind of similar economics still? Yeah, I mean, listen, we are. The way our unit economics and our ROE frameworks work is that we're pretty agnostic to the, to the mix. We go where the demand is and where we think we can efficiently underwrite and market to drive volume. And you know, we talked about this a lot over the years and you've seen us do that. You know, there are some slight differences between, between the two. Obviously the yields between the two portfolios are different, the charge off rates are different, which means the net revenue margins are a bit different. And you can kind of work your way down, you know, all the way through, including financing intensity across the two. But ultimately you get back to a pretty similar ROA across the two portfolios. And so, you know, we feel really good that the unit economics and our approach to how we go about meeting that demand is going to work really well for us. Whether you know, we see sometimes where SMB grows a bit faster like we've seen over the past year or so, but we've also seen times where consumers are going to grow faster than SMB. So you should expect that that time those types of opportunities will continue. Obviously most recently it's been more impacted by just the re acceleration as we get consumer rolling again after the middle of last year. So we feel really good about where we're headed and we feel really good about the economics across both portfolios. Got it. That's helpful.
David Scharf (Equity Analyst)
And switching to credit. I think you read my mind. I literally have written down to ask about sort of gas prices and spending based on the bank data that you started purchasing several years ago. I just wanted to make sure I heard what you said, that basically as a percentage of income so far, you're really not seeing any kind of noticeable change and where your borrowers how much they're allocating to gas or energy related expenditures and are they spending more in total when you look at bank account information and debit charges or is the gas spending pulling from other categories of spend?
Steve Cunningham (Chief Executive Officer)
So I think overall spending compared to income is about where it, you know, where it has been. So on average it's about the same. I mean the proportion spending on gas is pretty small. You know, I mentioned it's around 2%. We saw a slight increase. So it's not, you know, it's not materially crowding out like other, other categories of spending. And that's kind of what we saw. Again, as I mentioned, you know, in the last shock we saw in 2022, it really reflects, I think, you know, this isn't sort of a static environment. Right. These consumers and small businesses as well are going to adapt to the environment, change their behaviors if it's becoming a pressure for them. But I think, you know, it should encourage you that, you know, we've got a bit of a track record, we have a handle on, you know, what we expect to see. We're going to keep an eye on it and like we always do, we'll, we'll adapt if we see something different. But right now we think we're not really seeing anything that would cause us concern about the recent gas price increases on our consumers.
David Scharf (Equity Analyst)
Okay, got it. Which is consistent with what pretty much all lenders have been saying thus far. If I could squeeze just one more in. You know, a lot of calls this reporting season have had questions focusing on, you know, agentic commerce and you know, particularly for sort of, you know, any kind of point of sale lender. You know, there's more talk about kind of having to integrate with some AI platforms. Ultimately, you know, can you talk about how you best guess how you see your digital marketing evolving as, you know, traditional search kind of transforms into some other platforms, perhaps directing consumers to various financial services providers? You know, are certain integration kind of planning underway? How should we be thinking about how the customer acquisition model might change over the next few years?
Steve Cunningham (Chief Executive Officer)
Yeah, I mean, our marketing teams are, have been very active in this for quite some time looking at shifts. You know, you talk about search to the extent that people are using the AI models to do more search versus the traditional browsers all over the tools that allow you to understand where you stack up very similar to how you would look at how you stack up in a search. So we're well underway on that. It's not so dissimilar from when you think about traditional TV a few years ago and how things have quickly migrated into social media and a lot more targeted marketing versus a little bit more scatter shot. So I think, you know, our teams are very good at understanding where our customers are trending towards in terms of where they look to find products that like we would offer. And we're making great progress on, you know, making sure that we're migrating and being a leader in marketing in those channels so that we can maintain our, you know, our competitive advantage and continue to meet our customers where they want to be met. Got it. Thank you.
OPERATOR
The next question will come from Bill Ryan with Seaport Research Partners. Please go ahead.
Bill Ryan (Equity Analyst)
Good afternoon, Steven, Scott, and thanks for taking my questions. First question, just kind of following up on the consumer loan origination side, specifically on the line of credit. Looks like it was up about 3,4% year over year on what was arguably a very difficult comp a year ago, up 22%. And so the comps are getting quite a bit easier as the year progresses. But just overall, what is kind of what changes have you made that gives you a lot more confidence about stepping back into that market?
Steve Cunningham (Chief Executive Officer)
Yeah, so we talked about this a bit over the past couple of quarters. In particular, the line of credit was that particular segment that you were talking about with those growth rates was impacted by our purposeful look at credit back in the middle of last year to slow growth, make sure we were calibrated correctly, meeting our unit economics. And then we started re accelerating. Right. And so we've, we've reopened, you know, we're, we're back to business the way we historically have been. And I feel pretty confident with what we're seeing and what we've seen thus far into the second quarter as well that, you know, we're making good progress in getting back to business that, you know, very different than where we were say in the second or third quarter of last year. So I think a lot of it has to do with the demand we're seeing, the credit metrics that we monitor on a regular basis every week and you know, the results that we've been able to generate not just this quarter but so far into the second quarter. Okay, thanks for that. And just one follow up on the consumer loan yield. Not overly material, but looked like a little bit of a dip in the yield. I think it's about 300 basis points quarter over quarter. Any specific call outs on that? Hey, Bill, it's Scott. Yeah, I think Steve mentioned it. Hey, Steve mentioned it earlier. You know, some of the mix on the consumer side, more installment that has a little lower yield than the line of credit. So that's most of that. But we expect that to, as Steve mentioned again, flip back a little bit in the norm. Okay, thank you.
OPERATOR
Again, if you have a question, please press star and then one. The next question will come from Vincent Kaintik with btig. Please go ahead.
Vincent Kaintik (Equity Analyst)
Hey, good afternoon. Thanks for taking my questions. First, I Wanted to go back to the origination volume and marketing discussion. So, you know, really strong origination grew at 33% the marketing expense as a percent of revenues. That was a bit, a little bit higher than your guidance, which is fine with the origination growth you were able to get. But I was just curious if in the quarter after you gave the guidance last call, what did you see that drove that incremental originations and is the originations you're seeing kind of a better margin business than what you kind of typically plan for? You know, kind of is that originations from maybe less competition or I don't know where the outsized growth would come from. Just curious about that. Thank you.
Steve Cunningham (Chief Executive Officer)
Yeah, I mean, sometimes it's hard to tell. I mean, I think what the demand that we saw, I think again as I mentioned in my comments, is a reflection of, you know, our consumer and small business customers have been resilient as they navigated some of the market volatility and really the concerns about the future. Because if you look at the macro environment right now, it's actually in pretty good shape and really good for driving our customer demand to us. And so I don't think anything really changed other than we saw a lot of healthy demand from those customer bases and we were able to underwrite that with our unit economics approach. So I think that's, you know, at the end of the day, that's really what it's reflecting is that regardless of the headlines, regardless sometimes of what customers say about the future, which can, by the way, can snap back pretty quickly when things stabilize. I mean, their behaviors have been relatively, relatively stable over the past several quarters.
Vincent Kaintik (Equity Analyst)
Okay, great, that's helpful. And then second question on the funding side, I don't know. You know, once you have Grasshopper, this will be less of a concern. But if you could talk about kind of the funding appetite right now from your partners for whether it's small business loans or subprime consumer loans, given that there's been there had been some concerns in the quarter about private credit and just the funding appetite out there. If you could talk about how your spreads are doing and your funding partners are. Thank you. Yeah.
Steve Cunningham (Chief Executive Officer)
Hey, Vincent, so you saw us talk about the access we had on increasing four different warehouses across both consumer and SMB. So I think that's a testament to the to performance and the track record that we have in those portfolios. So we were able to upsize Those warehouses, about 377 million in total to give us room to grow. So that's Been our latest touch point and spreads held firm, and we did that at the existing terms with no widening like you've seen maybe in some of the other funding markets. So we feel good about where we're at. Okay, great. And maybe just sneaking one more in. I don't know if you could talk about anything in terms of the process of where you are with the Grasshopper bank acquisition. I know we're still planning for the second quarter close, but if there's any update on the regulatory or close process, that would be great. Thank you. It's actually the second half of 2026, not the second quarter. Vincent. Yep. So just. Just so you're. You're clear. I think we were clear in our remarks on that. But no, I don't. I think we said it all. I mean, I think there's a process you go through when you file a formal application with the regulators. We're. We're going through that process now. It's pretty typical for anybody who's applying for a bank charter or to become a bank holding company. So, as I mentioned in my remarks, I think we're making progress and we remain engaged on that. You know, what I would call a pretty typical application process, and more importantly, just our ability to work with the Grasshopper team. We've been really pleased with the progress that we're making to be ready to go when we do have the approvals to close the deal and hit the ground running to deliver on some of these really significant opportunities that we expect from the combination of the two companies. So. So I think that sums it up. And, you know, second half of the year is still our expectation.
Vincent Kaintik (Equity Analyst)
Great, thank you.
OPERATOR
The next question will come from John Hecht with Jefferies. Please go ahead.
John Hecht (Equity Analyst)
Afternoon, guys. Congrats on another good quarter. I wonder, maybe the first one would be, was the origination, call it flow, pretty consistent during the quarter, or did it, you know, was it. Is it back weighted from a seasonal perspective or did anything like geopolitical, you know, events accelerate or decelerate during the quarter?
Steve Cunningham (Chief Executive Officer)
No, John, I would describe our origination pattern pretty consistent with what we've seen in prior first quarters. As you know, SMB really doesn't have the same type of quarterly seasonality that we see on the consumer side. There tends to be some month, month to month variations, but in the quarter, we didn't see anything that was unusual as it relates to that typical month to month change that we would see from January to March. I think on the, on the consumer side, as we mentioned, on the Last call. We saw some of the post holidays strength into January, but that fades pretty quickly as you move into later, the later parts of January into the tax refund season. And then you start to see some of that come back, you know, a little bit later in Q1 and a little bit more in earnest as you move into the second quarter. So I would say pretty typical originations, patterns. I wouldn't say that there's any influence that we could see related to any type of the macro or geopolitical type
John Hecht (Equity Analyst)
issues that are out there. And then I guess, I mean, on a similar topic. Well, it's a similar topic in the sense that are you seeing any fluctuations in spend or payment patterns but higher fuel prices and maybe they don't stay high for long. Maybe they do.
Steve Cunningham (Chief Executive Officer)
But in your minds, does that impact small businesses in any way like it does the consumer? I mean, as I mentioned in the comments, if you look back at the last time we went through something like this in 2022, the fuel spike was actually much greater than where we are today and it lasted for quite a while during 2022. And you know, listen, I think both, just like I mentioned on the consumer side, I think small businesses, they will adapt to those cost pressures if they have them. But again, I think very similar to the consumer, it's not a static environment. So to the extent that there's these transitory pressures, they figure out ways to manage that either through reduced spending or bridging or whatever it may be more broadly, to the extent it, you know, impacts specific industries. We've talked before about industries like trucking which, you know, we are very careful with. Those are, those are probably the industries that have the most direct impact because of the input costs are such a large part of their business. So those are the industries we've been watching for quite some time and we know our exposures, they're manageable and we choose operators that are, you know, that we think are high quality and that will be able to manage the credit that we extend to them.
John Hecht (Equity Analyst)
Okay, great, thanks.
OPERATOR
The next question will come from Kyle Joseph with Stevens. Please go ahead.
Kyle Joseph (Equity Analyst)
Hey, good afternoon. Thanks for taking my questions. Most have been answered, but just kind of looking for an update on the SMB side in terms of kind of, you know, competitive environment, you know, where you guys have been taking share from whom you've been taking share and kind of just, you know, at what, you know, where you are now given the growth, kind of the overall share you guys retain in that market.
Steve Cunningham (Chief Executive Officer)
Thank you. Yeah, sure. So I mean, listen, this. The SMB market is large to begin with, and we've talked about in the past, new business formation over the past five or six years has been really, really strong. If you look at new business applications. And so those companies that are formed and they are a couple of years into their life and have shown staying ability, they're going to become our potential customers or part of that market. So the market is actually growing. It's probably growing a little bit faster than the overall consumer market. And then when you look at our, you know, just our presence in that market, our brand, our scale and our capabilities, you know, most of our most, you know, our set of competitors hasn't really changed much over time, and we feel like we have a lot of advantages on them. So it's kind of a great setup. We've got a large market. It seems to be growing quite nicely, and we've got a competitive, you know, some competitive advantages that allow us to be very successful, to be very selective and generate the growth that we think is going to create really strong, you know, returns for us and our shareholders.
Kyle Joseph (Equity Analyst)
Got it. Really helpful. Thanks, Steve.
OPERATOR
This concludes our question and answer session. I would like to turn the conference back over to Steve Cunningham, CEO, for any closing remarks.
Steve Cunningham (Chief Executive Officer)
We thank everyone for joining our call today and have a good night. Thank you.
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