Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Q3 2023 Earnings Presentation
31 slides from Oportun Financial's earnings presentation, Nov 6, 2023
Slide 1: 3Q 2023 Earnings Presentation
3Q 2023 Earnings Presentation November 6, 2023 1
Slide 2: Forward-looking statements
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, result
Slide 3: 3Q23 Earnings Overview
3Q23 Earnings Overview Focused on enhancing profitability and shareholder returns 7% Y/Y growth in total revenue to record $268M Lowest quarterly operating expense in 2 years at $123M Ahead of schedule with reductions, down 10% Q/Q; new post-IPO low 40.8% Adjusted Operating Efficiency Additional $26
Slide 4: Strategic priorities: focused on sustainable long-term growth & profitability
Strategic priorities: focused on sustainable long-term growth & profitability Secured Personal Streamlining Product Personal Loans Savings Loans Suite • Primary focus and largest • #1 savings app of 2023 • Expanding to • Sunsetting: Sezzle component of Oportun according to Bankrate approximately 40
Slide 5: Third quarter performance vs. guidance
Third quarter performance vs. guidance 3Q 2023 Guidance 3Q 2023 Actual Drivers Total Revenue $260 - $265 M $268 M Higher portfolio yield Annualized Net Charge-off 11.7% +/- 15 bps 11.8% In line with expectations Rate (%) Impact of fair value adjustments Adjusted EBITDA (1) $35 - $40 M $16 M and high
Slide 6: Third quarter 2023 highlights
Third quarter 2023 highlights Financial Highlights Adjusted Operating Efficiency(1) (1,335) bps Total Revenue GAAP Net Income $268M $(21)M 54.2% 43.4% 40.8% (1) (1) Adjusted EBITDA Adjusted Net Income $16M $(18)M GAAP Diluted EPS Adjusted EPS(1) 3Q22 2Q23 3Q23 $(0.55) $(0.46) Total revenue $250M $26
Slide 7: 3Q23 OpEx to average managed principal balance significantly more efficient than 2019
3Q23 OpEx to average managed principal balance significantly more efficient than 2019 OpEx to Average Managed Principal Balance (%) Adjusted OpEx to Average Managed Principal Balance (%)(1) 20.4% 18.1% 15.0% 13.4% 3Q19 3Q23 3Q19 3Q23 Opex Ratio Adjusted Opex Ratio (1) See Appendix for Key Definition
Slide 8: Credit performance
Credit performance Over 70 bps sequential decline in Annualized Net Charge-off Rate; 30+ Day DQ Rate 25 bps higher Annualized Net Charge-off Rate (%)(1) 30+ Day Delinquency Rate (%)(1) 12.5% 11.8% 9.8% 5.4% 5.3% 5.5% 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 (1) See Appendix for definition of 30+ Day Delinquenc
Slide 9: Post-July 2022 credit tightening loans are performing near-to-better than 2019 vintages
Post-July 2022 credit tightening loans are performing near-to-better than 2019 pre-pandemic vintages and growing in proportion Quarter-End Back Book Net-Charged Off Rates 30+ Day DQ Rate Portfolio Outstanding ($B)(2) Q3 Vintage(1) Q4 Vintage Q1 Vintage Q2 Vintage (MoB 12) (MoB 9) (MoB 6) (MoB 3) 6.1
Slide 10: Third quarter 2023 capital and liquidity
Third quarter 2023 capital and liquidity Two new personal loan financing agreements totaling up to $267 million; June-present financings total $967M; record $107M in operating cash flow Sources of Liquidity Net Change in Cash and Primary Drivers Operating Cash Flow Trend Fixed Rate Debt (%) ($M) ($M
Slide 11: Fourth quarter and Full Year 2023 guidance
Fourth quarter and Full Year 2023 guidance 4Q 2023E FY 2023E Total Revenue $260 - $265 M $1,054 - $1,059 M Annualized Net Charge-off Rate (%) 12.3% +/- 15 bps 12.2% +/- 10 bps Adjusted EBITDA (1) $5 - $10 M $0.5 - $5.5 M (1) See Appendix for Key Definitions and non-GAAP reconciliation to the most co
Slide 12: Appendix
Appendix
Slide 13: Key definitions
Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit card receivables 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 financial
Slide 14: Key definitions (cont'd)
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 retail
Slide 15: 3Q Adjusted EBITDA up $22M Y/Y, turning positive
3Q Adjusted EBITDA up $22M Y/Y, turning positive Adjusted EBITDA ($M)(1) $22M $(28)M $23 $16 $4.3 $(6.2) $(4.5) 3Q22 2Q23 3Q23 YTD 2022 YTD 2023 Adjusted EBITDA Margin (%)(1) Adjusted EBITDA Margin (%)(1) (2.5)% 1.6% 5.8% 3.4% (0.6)% (1) See Appendix for Key Definitions and non-GAAP reconciliation t
Slide 16: 3Q Adjusted Net Loss driven by non-cash fair value marks, higher net charge-offs and interest expense
3Q Adjusted Net Loss driven by non-cash fair value marks, higher net charge-offs and interest expense Adjusted Net Income (Loss) ($M)(1) $(26)M $(168)M $65 $8.4 $2.3 $(18) $(103) 3Q22 2Q23 3Q23 YTD 2022 YTD 2023 Adjusted ROE (%)(1) Adjusted ROE (%)(1) 5.6% 2.0% (15.5)% 15.0% (28.0)% (1) See Appendix
Slide 17: Owned Principal Balance and Aggregate Originations virtually flat sequentially
Owned Principal Balance and Aggregate Originations virtually flat sequentially under tightened credit posture Owned Principal Balance at EOP ($B) Aggregate Originations ($M) (1)% (24)% $3.0 $3.0 $2.9 $634 $485 $483 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 17
Slide 18: 3Q total revenue up 7% Y/Y
3Q total revenue up Total Revenue ($M) 7% Y/Y 7% $691 $794 $250 $267 $268 3Q23 Highlights Total Revenue: $268M, up 7% Y / Y due to higher average daily principal 3Q22 2Q23 3Q23 YTD YTD balance and portfolio yield 2022 2023 Net Revenue: $85M, down 42% Y / Y due to non-cash Net Revenue ($M) fair value
Slide 19: Strong risk-adjusted yield drives profitability
Strong risk-adjusted yield drives profitability 32.0% 19.8% (12.2)% 14.8% (5.0)% (1) (2) Gross Yield Net Charge-Offs Risk-Adjusted Yield Servicing Fees Unlevered Contribution Yield (1) Reflects annualized interest income for the nine months ended September 30, 2023 as a % of Average Daily Principal
Slide 20: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Nine Months Ended September 30 Change Change 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Members 2,098,172 2,005,008 1,911,592 1,877,260 1,858,335 12.9 % 2,098,172 1,858,335 12.9 % Products 2,259,464 2,155,240 2,059,007 2,006,245 1,981,310 14.0 % 2,259,
Slide 21: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Nine Months Ended September 30 Change Change ($ Millions, except per share data. Shares in Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Interest income $ 243.3 $ 240.5 $ 237.6 $ 244.1 $ 232.1 4.8 % $ 721.3 $ 632.0 14.1 % Non-interest inco
Slide 22: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y Cash and cash equivalents $ 81.9 $ 73.4 $ 74.1 $ 98.8 $ 175.9 (53.4) % Restricted cash 117.8 129.0 127.8 105.0 96.4 22.2 % Total cash $ 199.6 $ 202.3 $ 201.9 $ 203.8 $ 272.2 (26.7)% Loans receivable a
Slide 23: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Nine Months Ended September 30, Change Change ($ Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (21.1) $ (14.9) $ (102.1) $ (8.4) $ (105.8) 80.0 % $(138.1) $(69.3) (99.3)% Adjustments: Income tax expense (benefit) (16.2) (2.6) (3
Slide 24: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Nine Months Ended September 30, Change Change ($ Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (21.1) $ (14.9) $ (102.1) $ (8.4) $ (105.8) 80.0 % $ (138.1) $ (69.3) (99.3)% Adjustments: Income tax expense (benefit) (16.2) (2
Slide 25: Adjusted operating efficiency and adjusted operating expense reconciliation
Adjusted operating efficiency and adjusted operating expense reconciliation Quarter Ended Nine Months Ended September 30 Change Change ($ Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Operating Efficiency 45.7 % 51.1 % 56.4 % 57.8 % 103.7 % 51.0 % 81.8 % Total Revenue $ 268.2 $ 266.6 $ 259.5
Slide 26: Basic and diluted earnings per share reconciliation
Basic and diluted earnings per share reconciliation Nine Months Ended September Quarter Ended 30 Change Change ($ Millions, except per share data. Shares in Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (21.1) $ (14.9) $ (102.1) $ (8.4) $ (105.8) 80.0 % $ (138.1) $ (69.3)
Slide 27: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Nine Months Ended September Quarter Ended 30 Change Change ($ Millions, except per share data. Shares in Millions) 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Diluted earnings (loss) per share $ (0.55) $ (0.41) $ (3.00) $ (0.25) $ (3.21) 82.9 % $ (3.80) $ (2
Slide 28: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 4Q23 FY 2023 ($ Millions) Low High Low High Net (loss)* $ (25.4) * $ (21.8) * $ (95.6) * $ (91.9) * Adjustments: Income tax expense (benefit) (7.3) (5.9) (40.3) (39.0) Interest on corporate financing 11.5 11.5 38.3 38.3 Depreciation and amortization 11.
Slide 29: Net change in fair value
Quarter Ended Change Net change $ Millions 3Q23 2Q23 3Q22 2Q22 Q/Q Y/Y in fair value Loan Portfolio Drivers Discount rate 11.2 % 11.1 % 10.2 % 9.0 % —% 1.0 % Remaining cumulative charge-offs as a % of principal balance 11.9 % 11.4 % 11.7 % 11.2 % 0.6 % 0.3 % Average life in years 1.00 0.96 0.92 0.90
Slide 30: Fair value estimate methodology
Fair value Quarter Ended Change estimate 3Q23 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y methodology Weighted average portfolio yield over the remaining life of the loans 29.70 % 30.02 % 29.78 % 29.50 % 29.90 % 30.27 % 30.15 % (0.20) % Less: Servicing fee (5.00) % (5.00) % (5.00) % (5.00) % (5.00) % (5.00) %
Slide 31: Net lifetime loan loss rates by vintage
Net lifetime loan loss rates by vintage Year of Origination 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Dollar Weighted Average Original 9.3 9.9 10.2 11.7 12.3 14.5 16.4 19.1 22.3 24.2 26.3 29.0 30.0 32.0 33.3 37.8 Term for Vintage (Months) Net Lifetime Loan Losse