Enova International is using one of the strongest growth runs in its history to refashion itself from a pure-play online specialty lender into a chartered digital bank holding company. Second quarter revenue rose 21.6 percent to $928.9 million, net income climbed 38 percent to $105.1 million, and diluted earnings per share reached $4.00, up from $2.86 a year ago. Adjusted EBITDA of $255.8 million, a 27.5 percent margin on total revenue, marks a new high for the company. The small business portfolio, anchored by the OnDeck and Headway Capital brands, grew 34.6 percent year over year and now represents 47.3 percent of revenue, a structural shift that is lifting blended net revenue margin to 61.2 percent from 57.8 percent.
The most important strategic event is the pending acquisition of Grasshopper Bancorp, a $369 million deal expected to close in the second half of 2026 that will give Enova a national bank charter and a Banking-as-a-Service platform. If regulators approve the transaction, Enova will be able to fund itself with insured deposits rather than exclusively through securitization and the high-coupon unsecured note market, where it currently pays 9.125 percent on its 2029 notes and 11.25 percent on its 2028 notes. Funding diversification is the single biggest variable in the long-term earnings story.
The principal counterargument is regulatory and credit. Charge-offs in the small business portfolio ticked up to 4.8 percent of average receivables from 4.7 percent a year ago, delinquencies over 30 days are 7.4 percent versus 6.6 percent, and the consumer business, while improving, is exposed to a CFPB rule with payment provisions that are now operative. Stock-based compensation of $8.7 million in the quarter and $17.5 million for the half year dilutes the GAAP share count. The 9.125 percent and 11.25 percent unsecured notes set a high cost-of-capital floor that the company has so far earned through.
The most important forward variable is the Grasshopper closing timeline and the deposit funding cost that follows. A clean close during the third or fourth quarter, followed by a gradual migration of the loan book to deposit funding, would compress the funding cost meaningfully over a 24-month horizon and create a structural earnings tailwind. Conversely, a delayed or blocked deal would leave Enova as a more conventional specialty finance story whose 21 percent revenue growth must continue to outrun rising charge-offs and a high cost of debt.