Enova International, Inc.

ENVA Details

Enova International, Inc. (NYSE: ENVA) is a technology and analytics company that offers online financial services leveraging its artificial intelligence and machine learning platform. Its services include instalment loans, line of credit accounts, receivables purchase agreements, income share agreements, CSO programs and bank programs.

Latest News:

• Update on CFPB CID: On October 28, 2021, ENVA stated that the Consumer Financial Protection Bureau (CFPB) issued a Civil Investigative Demand (CID) relating to certain loan processing issues which the company voluntarily disclosed. It further elaborated that it is providing all data and information necessary for the completion of the investigation and intends to provide reimbursement to the customers impacted by these issues.

Q3FY21 Results:

• Significant Growth in Revenue: The company reported a YoY surge of 35.55% in revenues to USD 246.38 million during Q3FY21 (ended September 30, 2021) from USD 181.77 million during Q3FY20, attributable to a higher average combined loan and finance receivable balance.
• Decline in Net Income: ENVA reported a sharp decrease in net income to USD 51.55 million during Q3FY21 vs. USD 93.67 million reported in Q3FY20, owing to significantly higher marketing expenses (USD 79.73 million in Q3FY21 vs. USD 4.63 million in Q3FY20).
• Cash and Debt Position: As of September 30, 2021, the company had cash and cash equivalents of USD 229.09 million and total debt of USD 1.08 billion.

Key Risks:

• Dependence on Lead Providers: Lead providers are crucial to the company since they bring in new customers. As a result, the company's success is primarily dependent on the desire and ability of lead providers or marketing affiliates to provide consumer leads at competitive prices.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ENVA Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ENVA's stock price decreased 5.58% in the past six months and is currently leaning towards the higher end of its 52-week range of USD 15.13 to USD 41.06. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 38.73. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 35.46.

Considering the company's strong topline performance, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 32.305, down 0.23% as of October 29, 2021, 3:45 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV. 

Limelight Networks, Inc.

LLNW Details

Limelight Networks, Inc. (NASDAQ: LLNW) operates as global edge access and content delivery network (CDN) service provider and delivers live streaming sporting events, international movie premieres, video games, and file downloads for new phone apps. It also offers digital content distribution, video delivery, cloud security, edge computing, origin storage services, professional services and other infrastructure services.

Latest News:

• Adoption of EdgeXtend by NTT DOCOMO: On October 28, 2021, LLNW announced that NTT DOCOMO, INC., a leading Japanese mobile provider, chose its EdgeXtend to expand its content business to enhance customer engagement for thousands of viewers across Japan. EdgeXtend allows enterprises to accelerate content delivery to their customers by caching material from a network of 13 services.
• Layer0 Acquisition: On September 16, 2021, the company stated that it finalized the acquisition of Moov Corporation, d/b/a Layer0, which offers sub-second web apps and APIs through an all-in-one Jamstack platform. The purchase supports LLNW's plans of becoming an edge enabled SaaS solutions provider.

Q2FY21 Results:

• Drop in Revenues: The company reported a 17.42% decline in revenues to USD 48.35 million in Q2FY21 (ended June 30, 2021), compared to USD 58.55 million in Q2FY20, owing to post-COVID-19 lockdown related decrease in traffic volumes, reduction in the release of new content, and lower average selling price.
• Increase in Net Losses: LLNW's net loss increased dramatically to USD 13.70 million in Q2FY21 from USD 1.73 million in Q2FY20.
• Decent Balance Sheet: The cash and cash equivalents (including marketable securities) totaled USD 119.54 million as of June 30, 2021, with total debt amounting to USD 121.37 million.

Key Risks:

• Customer Concentration: LLNW' generated 78% and 79% of its total revenue in Q2FY21 and Q2FY20, respectively, from its top 20 clients. Such excessive reliance on a small number of customers for revenue could harm the company's financials.
• Geographic Concentration: Based on customer geography, the US and Japan represented over 10% of the company's total revenue in Q2FY21. Hence, any significant change in regulatory requirements or economic conditions in these regions might adversely impact LLNW's results of operations.

Outlook:

• Top & Bottom-Line Estimates: In its Q2FY21 release, LLNW stated that it expects its FY21 to range between USD 220 – 230 million, with GAAP and non-GAAP EPS ranging from USD (0.35) to (0.25) and USD (0.15) to (05), respectively. In addition, the estimated adjusted EBITDA range is USD 20 – 30 million.
• CAPEX: The company anticipates incurring between USD 15 and 20 million in capital expenditures during FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

LLNW Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

LLNW's stock price has increased 6.23% in the past three months and is currently leaning towards the lower end of the 52-week range of USD 2.30 to USD 5.61. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 67.50. We have valued the stock using the EV/Sales-based relative valuation method and arrived at a target price of USD 3.26.

Considering the company's growth prospects, strategic acquisition, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 2.99, up 1.88% as of October 29, 2021, 2:07 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.