Return to accelerated growth backed by historically highest profitability

Operational and Strategic Highlights

Profitability

• Eleving Group ended the first half of 2024 with excellent consolidated results, recording revenues of EUR 106.0 mln, up by over 20% compared to the corresponding reporting period a year ago.
• A diversified portfolio alongside a well-balanced revenue stream from all key business segments:
  • Flexible lease and subscription-based products contributed EUR 23.4 mln to the revenues.
  • Traditional lease and leaseback products contributed EUR 36.3 mln to the revenues.
  • The consumer loan segment contributed EUR 46.3 mln to the revenues.
• The Group's adjusted EBITDA reached the historically strongest six-month results of EUR 43.7 mln, an impressive leap of around 27% compared to the corresponding reporting period a year ago.
• The net portfolio increased to EUR 343.5 mln at the end of the first half of 2024, up by 21% compared to the EUR 284.2 mln for the first 6M 2023.
• Net profit before FX and discontinued operations reached EUR 17.1 mln during the first six months of 2024, a formidable increase of 38% compared to the corresponding reporting period a year ago (6M 2023: EUR 12.4 mln).
• Net profit after FX from continued operations reached EUR 14.9 mln, a solid increase of 32% compared to the corresponding reporting period a year ago (6M 2023: EUR 11.3 mln).
  • Portfolio quality has been the main driver behind the improved bottom line during the first half of 2024 as the impairment expense decreased by 4% to EUR 19.7 mln (6M 2023: EUR 20.5 mln) while the revenue increased by more than 20% compared to the corresponding reporting period.
  • Even with lower impairment expenses, impairment coverage increased by 2.1% p.p. for the Consumer Finance and 2.3% p.p. for Vehicle Finance portfolios compared to the corresponding reporting period a year ago.

Growth

• Loan issuance volumes increased to EUR 167.0 mln, an improvement of 29% (6M 2023: EUR 129.3m). The main drivers have been an increased organic demand for our products, further expansion of sales channels, and weakening local competition in certain markets.
• Eleving Group saw a significant increase in customer activity in the Vehicle Finance segment. The loan application count during Q2 2024 grew by nearly 29% compared to Q1 2024, and the six-month figures leaped by more than 70% compared to the corresponding reporting period a year ago. Impressive growth in applications has been recorded across most of the markets, with the Latvian and Romanian car financing segment and East Africa’s motorcycle segment standing out the most. The number of vehicles financed also noticeably increased during Q2 2024, stimulating 17% growth compared to Q1 2024, with the Group maintaining prudent underwriting standards and keeping the conversion rate at a stable level of 8.1% during Q2 2024.
• The Group's Consumer Finance business line continues setting new loan issuance volume records each quarter, reaching a new milestone of EUR 44.8 mln worth of loans issued in Q2 2024, an increase of 6.5% compared to Q1 2024. In its mature Consumer Finance European markets, the Group continued to demonstrate consistent performance, maintaining a stable net portfolio size, while the growth stems from scaling up the business in the Sub-Saharan region, where the loan issuance volume reached EUR 15.7 mln during Q2 2024, up by EUR 3.4 mln compared to Q1 2024. The African Consumer Finance operations also set a new record in the number of loans issued, reaching a 55,300 loan milestone and surpassing the Q1 2024 result by 20.6%. This was achieved while keeping prudent underwriting standards, and the conversion rates for all Consumer Finance business lines only marginally increased by 3.5% p.p. to 34.3% in Q2 2024 (Q1 2024: 30.8%).
• Despite significant growth in applications received and loans issued, the company managed to maintain excellent marketing expense discipline, as the ratio of the Group’s marketing expenses against the revenue over the first six months of 2024 dropped by 0.2% p.p. to 3.3% (6M 2023: 3.5%). Overall, marketing expenses have remained unchanged, having increased by only EUR 0.4 mln to EUR 3.5 mln during the first half of 2024, compared to the corresponding reporting period a year ago (6M 2023: EUR 3.1 mln), yet brand awareness among customers is improving. 

Operational Milestones

• In June, Eleving Group received Kenya's digital credit provider license. This achievement allows the company to reach a larger customer base, expand its financing product range, and more efficiently serve the underbanked population. The Group also anticipates that the digital credit provider license will help improve local currency funding conditions for further regional business funding efforts.
• In May, the Group rolled out an electric motorcycle (e-boda) product in Uganda, and already during the first months, issuance volumes have outperformed Kenya's initial figures. Eleving Group continues to see an insatiable demand for green mobility products in Kenya and Uganda, where it is a front-runner in the e-boda financing segment. African Vehicle Finance operations currently record around 280 e-boda loan issuances per month and aim to reach a new milestone of 500 issued loans per month in the following quarters.
• A new generation 2.0 digital solution (customer self-service platform) has been successfully rolled out in Romania, with over 7,000 registered users as at June 30, 2024. The solution is planned to be launched in all Eleving Vehicle Finance European markets by the end of the year.
• In Q2 2024, Eleving Group appointed an international Supervisory Board consisting of three investment and start-up ecosystem experts from the Baltics and the USA. The Group expects further improvements in the company's corporate governance standards and strong support for management in strategic business decisions.
• On 30 July 2024, the recently established Supervisory Board and the Group’s Management Board approved a new Eleving Group dividend policy. Dividend distribution is based on capital structure (namely, the equity ratio), and the target dividend payout ratio is within the 30%-50% range of the yearly net profit. Dividends are planned to be distributed to the shareholders two times a year.

Financial Highlights and Progress

• Consistent profitability as evidenced by the strongest-ever business financials:
  • Adjusted EBITDA of EUR 43.7 mln (6M 2023: EUR 34.3 mln).   
  • Net profit before FX 17.1 mln (6M 2023: EUR 12.4 mln).  
  • Net profit of 14.9 mln (6M 2023: EUR 11.3 mln).
  • Total net loan and pre-owned vehicle rent portfolio of EUR 343.5 mln (6M 2023: EUR 284.2 mln).
  • 6M 2024 ended with a healthy financial position, supported by the capitalization ratio of 26.0% (31 December 2023: 26.1%), ICR ratio of 2.4 (31 December 2023: 2.3), and net leverage of 3.3 (31 December 2023: 3.7), providing an adequate and stable headroom for Eurobond covenants.   
• During Q2 2024, Eleving Group continued to explore potential external equity-raise opportunities, with an IPO in the Baltics remaining as one of the likely avenues. The company aims to raise additional equity to facilitate further business growth, including but not limited to launching new products and markets.
• The international credit ratings agency Fitch Ratings acknowledged the Group's improved balance sheet structure and consistent profitability. During Q2 2024, the Group's credit rating was upgraded from B- to B (stable outlook). This is a further testament to Eleving Group’s improvements in fundraising and capital allocation, execution of its long-term strategy, and strengthened corporate governance.
• Eleving Group remains focused on its strategic direction of further diversifying its debt profile and funding through various channels, primarily in local currencies, and optimizing funding costs in the EUR and USD currencies:
  • The Group continues pragmatically tapping into Mintos, the marketplace for loans. The weighted average annual funding cost for Mintos was substantially reduced from 9.7% to 8.7% over Q2 2024, significantly reducing the Group's interest expense and further improving its profitability. The weighted average annual funding cost stood at 12.6% at the end of the corresponding reporting period a year ago. As at the end of Q2 2024, Eleving Group had outstanding loans of EUR 62.5 mln on Mintos (compared to EUR 71.7 mln as at 31 March 2024), a decrease of EUR 9.2 mln. 
  • Outstanding investments raised through the Kenyan local notes program increased by around 23% from EUR 13.0 mln to EUR 16.0 mln during Q2 2024. Most of this funding is secured in the local currency.
  • Eleving Group is also in the late negotiation stages with a local bank in Uganda to raise the local currency equivalent of around USD 5 mln to support its capital structure in the country further.
• During Q2 2024, the Group increased its equity to EUR 87.7 mln (EUR 86.9 mln as at 31 March 2024), further solidifying its capital base for future growth.

Modestas Sudnius, the CEO of the Eleving Group, comments: 

“This quarter has been historically strong, with exceptional performance in all key business areas, recording outstanding organic growth rate and portfolio quality results. The current growth pace has already kept up for the second consecutive quarter, which aligns with our 2023-end promise to return to a more rapid growth vector in 2024 by targeting a significant double-digit growth rate. 
In Q2, compared to Q1 of this year, we saw a significant increase in sales volumes in the vehicle financing segment, and the majority of our markets reached six-month budget goals early. Also, the number of applications received doubled, compared to Q2 a year ago, while we maintained the marketing costs and conversion rates across all markets at a conservative level. Even more than in other quarters, for this period, I would like to emphasize that our unit economics continue to strengthen; the EBITDA grows faster than the revenue, leading to growth that does not come at the expense of the profit. 
During the quarter, we also reached several notable operational milestones, including receiving the digital credit provider license in Kenya. We are one of the first asset financiers to obtain this license, which confirms that Mogo Kenya meets the expected governance, transparency, responsibility, and business ethics standards. We have also finished Romania's digitalization and digital customer portal project. In the first half of the year, it has already brought significant value in issuance volumes and reduced customer delays as it helps streamline customer onboarding and handling the entire credit cycle. Following the success in Romania, similar upgrades of the system will be introduced in other European markets as well. 
In Q2, we appointed an international Supervisory Board consisting of experienced experts from the investment community and start-up ecosystem in the Baltics and USA. The functions of the newly appointed governance structure will include strengthening the company’s corporate governance, advising management on business decisions, overseeing a potential IPO or external equity raise, and contributing to the company’s future strategy. At the end of July, the new Supervisory Board and the Group's Director's board approved the new Eleving Group dividend policy as one of the first major joint decisions.
On a different note, we have also maintained our sustainable mobility course. In Q2, we significantly increased our EV financing in Kenya and Uganda, and by the end of the quarter, we had financed around 700 e-motorcycles. It is four times the number financed in the last year. Seeing the increasing demand and improved logistics, we will soon overachieve our initial goals for the year, and a 1000 e-motorcycle benchmark will be reached already within the next few months. As for the following quarters, we plan to strengthen our position in promoting the transition to electric mobility in our Eastern African region markets.” 

Maris Kreics, the CFO of Eleving Group, comments: 

“Second quarter of 2024 has proven to be highly successful, showcasing healthy long-term development patterns for our business. The Group reported revenues of EUR 106.0 mln for the first six months of the year, reflecting a 20% increase over the same period last year. Our net portfolio expanded to EUR 343.5 mln, representing a 21% growth compared to one year ago. Additionally, the adjusted EBITDA climbed to EUR 43.7 mln for the first six months of the year, while the net profit was EUR 14.9 mln respectively, a 32% rise from the six months in 2023. These figures demonstrate the stability and capacity of the business to achieve profitable growth. 
The international credit rating agency Fitch Ratings has positively assessed the Group’s latest achievements from the financial results perspective and has upgraded Eleving Group’s credit rating from ‘B-’ to ‘B,’ with a stable outlook. The rating upgrade marks a significant milestone for the company and is a validation of the Group’s recent achievements in the following areas – execution of the strategy, financial results, corporate governance, and successful performance in the capital markets. 
During Q2, we continued to explore external equity raise options that could potentially result in a pan-Baltic IPO. This would make Eleving Group one of the most globally oriented companies on the Baltic stock exchange, potentially drawing significant international interest and providing new opportunities for Baltic and global investors. It could also result in one of the largest IPOs in the Baltics in recent years. 
Entering Q3, Eleving Group holds an even stronger market position and more robust balance sheet, demonstrating that we are prepared for the various decisions associated with capital markets and strong enough to ensure long-term growth that brings additional value to the company's investors and its clients.” 

Full unaudited consolidated report on the 6M period ended on 30 June:https://eleving.com/investors/ 
Conference Call: 
A conference call in English with the Group's management team to discuss the results is scheduled for 1 August 2024 at 15:00 CET. 
Link to register for a conference call can be foundhere. 

Eleving Group 
Edgars Rauza, Eleving Group Investor Relations Manager 
Email:edgars.rauza@eleving.com 

About Eleving Group 

Eleving Group has driven innovation in financial technology around the world since its foundation in Latvia in 2012. As of today, the group operates in 16 markets and 3 continents, encouraging financial inclusion and upward social mobility in underserved communities around the globe. Eleving Group has developed a multi-brand portfolio for its vehicle and consumer finance business lines, with around 2/3 of the portfolio comprising secured vehicle loans and mobility products, with Mogo as the leading brand, and around 1/3 of the portfolio including unsecured consumer finance products, with Kredo and Tigo as the segment’s flagship brands. Currently, 57% of the group's portfolio is located in Europe, 30% in Africa, and 13% in the rest of the world. 
The Group's historical customer base exceeds 660,000 customers worldwide, while the total volume of loans issued goes beyond EUR 1.8 billion. With headquarters in Latvia, Lithuania, and Estonia and a governance structure in Luxembourg, the Group ensures efficient and transparent business management, powered at the operational level by 2800 employees. For two consecutive years, the Group was listed among Europe’s 1000 fastest-growing companies published by the Financial Times in 2020 and 2021. 

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