Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Corporate Update (October 2024)
28 slides from Oportun Financial's corporate update, Oct 29, 2024
Slide 1: Business Update October 29, 2024
Business Update October 29, 2024
Slide 2: Forward-looking statements
2 Forward-looking statements This presentation and the accompanying oral presentation contain forward-looking statements. All statements other than statements of historical fact contained in this presentation and the accompanying oral presentation, including statements as to future performance, resu
Slide 3: Executive Summary
3 In 2025, Oportun expects to deliver GAAP profitability with $0.25 to $0.50 of Diluted EPS, $1.00 to $1.25 of Adj. EPS, and Annualized Net Charge-Off Rate between 11% and 12% Executive Summary Proactive Steps to Strengthen Balance Sheet, Enhance Operational Flexibility, Improve Financial Results, A
Slide 4: Strengthening Balance Sheet and Enhancing Flexibility
4 • At the beginning of 2024, the Board of Directors of Oportun launched a process to explore strategic options, including a potential refinance of its senior secured corporate financing facility • After a thorough and competitive process, where multiple strategic options were considered, the Board
Slide 5: Previous Facility vs New Facility: Why Refinance?
5 Previous Facility New Facility Why Refinance? Covenants Prior facility’s ACR covenant limited operational flexibility to enhance shareholder value and didn’t reflect operational improvements in the business New facility’s Adj. EBITDA based leverage covenant rewards accretive decisions and recogniz
Slide 6: Consistent Cash Flow Generation De-levers the Business
6 $77 $103 $107 $106 $86 $108 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 (1) Ability to prepay an additional $10M without penalty anytime and an incremental $10M without penalty after first anniversary of closing Strengthening Balance Sheet and Enhancing Flexibility (Cont’d)1 Consistent Cash Flow Generation De-l
Slide 7: Demonstrated Access to Capital Markets
7 $300 $400 $197 $70 $50 $200 $150 $245 $223 $306 Jun-23 Aug-23 Oct-23 Nov-23 Dec-23 Feb-24 Apr-24 Aug-24 Aug-24 Sep-24 Strengthening Balance Sheet and Enhancing Flexibility (Cont’d)1 Demonstrated Access to Capital Markets Since June 2023, raised over $2.1 billion in financings and loan sales with f
Slide 8: Improving Credit Performance
8 Improving Credit Performance 2 Pre-July 2022 Credit Tightening Back Book Continues to Shrink and Post-July 2022 Credit is Outperforming (1) Excludes Credit Card (2) Back Book includes 1Q22 and 2Q22 vintages; Front Book includes 3Q22 – 2Q23 vintages; 3Q22 vintage only includes August and September
Slide 9: Driving Profitability Through Focus on Core Products and Expense Reduction
9 Driving Profitability Through Focus on Core Products and Expense Reduction Focus on Proven and Profitable Products to Drive Sustainable Growth, Enable Significant Operating Expense Reduction and Increase Profitability Unsecured Personal Loans (“UPL”): ✓ Primary focus and largest component of Oport
Slide 10: 2Q24 Performance: Significant Y/Y Improvement On Key Metrics
10 3 Driving Profitability Through Focus on Core Products and Expense Reduction (Cont’d) 32.2% 33.9% 2Q23 2Q24 Portfolio Yield 19.7% 21.6% 2Q23 2Q24 Risk Adjusted Yield $93 $84 2Q23 2Q24 Net Charge-offs ($M) $123 $94 2Q23 2Q24 Adjusted Operating Expense ($M) 2Q24 Performance: Significant Y/Y Improve
Slide 11: Adjusted EBITDA Trends
11 3 Driving Profitability Through Focus on Core Products and Expense Reduction (Cont’d) ($20) $14 $14 $9.9 $1.9 $30 $30 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24E Adjusted EBITDA Trends ($M) (1) Beginning 1Q24, we updated our calculations of Adjusted EBITDA and Adjusted Net Income (Loss). Prior periods pr
Slide 12: Preliminary 3Q24 Financial Results
12 3 Driving Profitability Through Focus on Core Products and Expense Reduction (Cont’d) Metric Preliminary 3Q24 Guidance 3Q24 Total Revenue $249 — $251M $248 — $252M Annualized Net Charge-Off Rate 11.9% 12.3% +/- 15 bps Net Loss $(30) – $(32)M N/A Adjusted EBITDA(1) $28 – $31M $23 – $26M Adjusted N
Slide 13: FY 2025 Preliminary Expectations and Performance Drivers
13 Driving Profitability Through Focus on Core Products and Expense Reduction (Cont’d)3 FY 2025 Preliminary Expectations and Performance Drivers Return to prudent originations growth when market dynamics support Improved credit performance following enhanced underwriting and runoff of back book Ongo
Slide 14: Strategic Actions Drive Enhanced Value
14 • Prioritize use of free cash flow towards debt repayment • Reduce cost of capital • At least $40M of corporate debt on new facility to be repaid by 1/31/26 20-28% 12%(1) to 9-11% 7.9:1(1) to 6:1 2Q24 ROE Target ROEImprove Credit Performance Continue Expense Reduction Enhance Balance Sheet Flexib
Slide 15: Path to Target ROE
15 A APR = B Non-Interest Income C Cost of Funds D Net Charge Offs E Operating Expenses ROA(1) ROE== = F 6:1 (86%) Leverage = Total Revenue Yield Net Interest Margin Risk Adjusted NIM Core mission offering affordable credit to underserved communities Savings and other products; gain on sale and serv
Slide 16: Oportun is Well Positioned to Deliver Enhanced Shareholder Value
16 Strengthening Balance Sheet and Enhancing Flexibility1 Improving Credit Performance2 Driving Profitability Through Focus on Core Products and Expense Reduction 3 Oportun is Well Positioned to Deliver Enhanced Shareholder Value In 2025, Oportun expects to deliver GAAP profitability with $0.25 to $
Slide 17: Appendix
Appendix
Slide 18: Summary of Key Terms of Refinancing
18 Co-Lenders Castlelake L.P. (50%) and Neuberger Berman Group LLC (50%) Instrument $235M Senior Secured Term Loan Use of Proceeds Fully pay down both existing corporate financings, transaction related expenses, and general corporate purposes Interest Rate 15.0% per year; 2.5% of the total may be pa
Slide 19: Key definitions
19 Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit cards receivable that are 30 or more calendar days contractually past due as of the end of the period divided by Owned Principal Balance as of such date • Adjusted EBITDA is a non-GAAP financ
Slide 20: Key definitions (cont'd)
20 Key definitions (cont’d) • Customer Acquisition Cost (or "CAC") is calculated as sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand marketing and the costs associated with our telesales and reta
Slide 21: Adjusted EBITDA reconciliation
21 Adjusted EBITDA reconciliation Quarter Ended Six Months Ended June 30, Change Change ($ Millions) 2Q24 1Q24 4Q23 3Q23 2Q23 Y / Y 2024 2023 Y / Y Net income (loss) $ (31.0) $ (26.4) $ (41.8) $ (21.1) $ (14.9) (108.2)% $(57.5) $(117.0) Adjustments: Income tax expense (benefit) (18.1) (4.0) (15.5) (
Slide 22: Adjusted net income reconciliation
22 Quarter Ended Six Months Ended June 30, Change Change ($ Millions) 2Q24 1Q24 4Q23 3Q23 2Q23 Y / Y 2024 2023 Y / Y Net income (loss) $ (31.0) $ (26.4) $ (41.8) $ (21.1) $ (14.9) (108.2)% $ (57.5) $ (117.0) 50.9 % Adjustments: Income tax expense (benefit) (18.1) (4.0) (15.5) (16.2) (2.6) (604.7) %
Slide 23: Adjusted operating expense reconciliation
23 Quarter Ended Six Months Ended June 30 Change Change ($ Millions) 2Q24 1Q24 4Q23 3Q23 2Q23 Y / Y 2024 2023 Y / Y Operating Efficiency 43.6 % 43.8 % 49.3 % 45.7 % 51.1 % 43.7 % 53.7 % Total Revenue $ 250.4 $ 250.5 $ 262.6 $ 268.2 $ 266.6 (6.1)% $ 500.9 $ 526.1 (4.8) % Total operating expense $ 109
Slide 24: Earnings per share reconciliation
24 Quarter Ended Six Months Ended June 30 Change Change ($ Millions, except per share data. Shares in Millions) 2Q24 1Q24 4Q23 3Q23 2Q23 Y / Y 2024 2023 Y / Y Net income (loss) $ (31.0) $ (26.4) $ (41.8) $ (21.1) $ (14.9) (108.2) % $ (57.5) $ (117.0) 50.9 % Net income (loss) attributable to common s
Slide 25: Adjusted earnings per share reconciliation
25 Quarter Ended Six Months Ended June 30 Change Change ($ Millions, except per share data. Shares in Millions) 2Q24 1Q24 4Q23 3Q23 2Q23 Y / Y 2024 2023 Y / Y Diluted earnings (loss) per share $ (0.78) $ (0.68) $ (1.09) $ (0.55) $ (0.41) (90.2) % $ (1.46) $ (3.31) 55.9 % Adjusted Net Income $ 3.2 $
Slide 26: Forward looking adjusted EBITDA reconciliation
26 Forward looking adjusted EBITDA reconciliation 3Q 2024 ($ Millions) Low High Net income (loss) $ (32) $ (30) Adjustments: Income tax expense (benefit) (10.2) (9.5) Corporate Debt Interest 12.6 12.6 Depreciation and amortization 13.5 13.5 Stock-based compensation expense 3.2 3.2 Other non-recurrin
Slide 27: Forward looking adjusted net income and adjusted EPS reconciliation
27 Forward looking adjusted net income and adjusted EPS reconciliation 3Q 2024 FY 2025 ($ Millions, except per share data. Shares in Millions) Low High Low High Net income (loss) $ (32) $ (30) $ 12.6 $ 25.1 Adjustments: Income tax expense (benefit) (10.2) (9.5) 4.7 9.3 Stock-based compensation expen
Slide 28: Investor Contact
Investor Contact Dorian Hare 650-590-4323 ir@oportun.com