Elevate Credit : Open Letter from CEO

Elevate Team -

I am writing to share some difficult news with you today. I want to be direct as possible and offer as much detail as I can. Later today, I will be hosting a virtual meeting that I hope you can join.

We have made the decision to reduce the size of Elevate's US workforce by 93 people, a 17% reduction. This is the most challenging decision I have made or been a part of since Elevate was founded six years ago. However, this is necessary for the business and its long-term financial health. First, I would like to offer my sincere thanks to all of our impacted team members, your hard work helped make Elevate what it is today.

These layoffs will affect every department at Elevate. In addition, Executive Team and Board of Directors salaries will be reduced, individual and corporate bonuses for this year will be eliminated, and merit increases will be suspended. We have additionally reduced third party expenses and other costs where we were able. Collectively, these actions will bring our operating expenses to levels necessary to support the expected portfolio going forward.

How did we get here? Like so many companies, COVID-19 has created significant and unexpected challenges for our business.

At the start of the year, we forecasted minimal revenue growth - especially compared to historical levels. This year was about setting the stage for future growth. We expected operating expenses would be on the higher side of our targets, but manageable.

Then the pandemic struck. On March 16^th, we switched to a work-from-home environment. Elevate, along with the banks we support, took the appropriate action of halting originations and pausing all marketing. We made the decision to focus on existing customers and to help them weather the crisis with additional payment flexibility features. However, these actions did not mitigate the overall revenue shortfall.

In April, we announced three separate measures to bring down operating expenses - 1) a workforce reduction in the UK; 2) deprioritization of certain projects; and 3) a 50% reduction in corporate bonuses.

On our earnings call in May, we forecasted two potential scenarios: one where loan originations would restart this summer and another where loan originations would remain depressed throughout 2020. Unfortunately, consumer demand for the second half of this year remains largely uncertain.

On June 24^th, I said we would dig even deeper to find ways to cut costs. Last week, we decided to exit the UK market and reduce the associated overhead in order to focus on our US operations.

While all of these steps were necessary, they are not sufficient to get us back to a place of short- or long-term financial health. That is what led us to the difficult decision to reduce our workforce and compensation.

What happens to those impacted?

Impacted employees are meeting with their leaders and are being provided with a severance package that will recognize their years of service to the company. These exit packages will increase our operating expenses in the short-term, but we are committed to taking care of those that are leaving.

Over the long-term, our decision will best position us to weather slower expected portfolio growth and prolonged impacts to our business from COVID-19.

We've always been a company that cares deeply about each other, so this announcement impacts us all. If you or one of your Elevate colleagues needs support during this time, I encourage you to utilize Elevate's Employee Assistance Program for free virtual or face-to-face sessions with a counselor.

What now?

Teamwork is vital to Elevate's long-term success as we continue to persevere through these unprecedented times. I encourage every employee to remain focused and 'run it like you own it' more than ever. We remain confident in your abilities and in our continued success as a company. And in undergoing these reductions, we hope to avoid any additional actions this year. It is my sincere hope that what I've outlined today allows us to maintain the near- and long-term health of the business. I want to personally thank each of you for your dedication to the company and our work.

To those who are leaving Elevate, I wish circumstances were different, but I want to again personally thank you for all of your contributions to Elevate and hard work serving non-prime consumers.

Please reach out to your department leader or to me directly with any follow-up questions.