Cash America 2013 Annual Report Download - page 7

the unique experiences of our underwriting team in
Chicago provide long-term sustainable competitive
advantages for Enova.
• Expansion of organic customer acquisition activities –
Another long-standing strategic objective of Enova
has been the migration of customer acquisition
activities away from the lead generation channel into
the organic channels of search engine optimization,
pay-per-click, mobile contact and more traditional
means such as television, direct mail and afliate
advertising. This migration was slower than we
hoped in the early years of Enova’s evolution but has
gained steam in recent years. We believe the organic
channels provide greater brand support, better cost
leverage and added exibility with messaging.
• Competitive advantages as a fully-licensed lender –
Enova has historically been one of the few, if not only,
fully licensed non-bank online lenders of scale in the
U.S. The company recognized early that positioning
itself as a fully licensed lender would undoubtedly
constitute a short-term competitive disadvantage,
but believed it would be rewarded in the long term as
unlicensed online lenders became subject to greater
regulatory scrutiny. This theory nally began to play
out as anticipated in 2013 as a number of state and
federal agencies instituted certain actions to disrupt
the business ow of unlicensed online lenders. We
believe that reducing the number of unlicensed lenders
from the markets we serve could provide future
opportunities for Enova.
• Implications of new regulations in both the UK and
U.S. – From a valuation perspective, all of the positive
momentum produced by the rst four items has been
tempered by the ongoing uncertainty of potential
new regulations expected from the Consumer
Financial Protection Bureau in the U.S. and the
Financial Conduct Authority in the UK. Plenty of
public information is available regarding potential
regulations so I will not catalog those here. We are
hopeful that once any new regulations are adopted,
if ever, we will be able to adjust our product design
to be compliant while still efciently meeting our
customers’ needs at acceptable rates of return on the
assets we deploy. In this regard, given our strengths in
innovation, analytics and compliance, we believe we
are better positioned than our competitors to succeed
if regulations become more restrictive.
Outlook
So where are we today on that continuum of experiences
I referenced in the opening paragraph? My personal view
is that Cash America, the consolidated enterprise, should
emerge in 2014 from the setbacks of the past two years
with growth in revenue and adjusted net income, a non-
GAAP measure. That positive momentum will be created
by the continued growth of our E-Commerce Segment
in both the U.S. and UK. We expect the revenue growth
at Enova to be heavily skewed in favor of installment
loans and line of credit products. We expect the Retail
Services Segment will begin showing year-over-year
improvements in the latter half of the year as we nally
begin to anniversary the outsized commercial disposition
prots from the gold rush years. Our outlook for the
Retail Services Segment does not assume any signicant
change in the sentiment of our retail services consumer,
but it does predict success with our execution initiatives
in the eld.
The supply and demand of consumer credit for the
underbanked segment of society remains seriously
out-of-balance today. This mismatch is worse today
than it was when Cash America rst began serving this
consumer in 1984. Cash America and other non-bank
nancial services companies have grown dramatically
over the past few decades by lling the gaps wherever
possible. However the retreat of traditional lenders,
primarily the banks, has greatly outpaced all efforts
of Cash America and others to rebalance supply and
demand. The gap continues to widen as more and more
people nd themselves in the ranks of the underbanked.
These consumers will continue to search for fair,
convenient and affordable solutions. We intend to be
their provider of choice.
Thank you for your support.
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Daniel R. Feehan
Chief Executive Ofcer and President
April 2014