Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Q3 2024 Earnings Presentation
37 slides from Oportun Financial's earnings presentation, Nov 12, 2024
Slide 1: 3Q 2024 Earnings Presentation
3Q 2024 Earnings Presentation November 12, 2024 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: Third quarter performance vs. guidance
Third quarter performance vs. guidance 3Q 2024 Guidance 3Q 2024 Actual Total Revenue $248 - $252M $250M Annualized Net Charge- 12.3% +/- 15 bps 11.9% Off Rate (%) Adjusted EBITDA (1) $23 - $26M $31M (1) See Appendix for Key Definitions and non-GAAP reconciliation to the most comparable GAAP measure;
Slide 4: 3Q24 Earnings Overview
3Q24 Earnings Overview Key Financial Results - Resilient total revenue of $250M under conservative credit posture - Quarterly operating expense of $102M down 17% Y/Y; lowest since 2020 - Adjusted EBITDA of $31M, 117% Y/Y growth - Adjusted Net Income profitability Profitable on an adjusted basis in e
Slide 5: 2024 Strategic Priorities
2024 Strategic Priorities • Front book annualized NCO rate of 10.4% vs. 23.7% back book Improving Credit • Front book exhibits 400+ bps lower losses 12+ months post-disbursement Outcomes • 30+ day delinquencies decline Y/Y for third consecutive quarter to 5.2% • V12 credit model driving new loan por
Slide 6: 3Q24 performance: Significant Y/Y improvement on key metrics
3Q24 performance: Significant Y/Y improvement on key metrics Portfolio Yield Risk Adjusted Yield s +56 bp 21.3% s +69 bp 33.2% 20.8% 32.5% 3Q23 3Q24 3Q23 3Q24 Net Charge-offs ($M) Adjusted Operating Expense ($M) -17.3 $116 % -6.4% $88 $96 $82 3Q23 3Q24 3Q23 3Q24 6
Slide 7: Third quarter 2024 highlights
Third quarter 2024 highlights Adjusted EBITDA and Adjusted Net Income Financial Highlights (Loss) Trends ($M)(1) $30 $31 Total Revenue GAAP Net Loss $250M $30M $14 (1) (1) Adjusted EBITDA Adjusted Net Income $31M $0.9M $3 $1 GAAP Diluted EPS Adjusted EPS(1) $(0.75) $0.02 $(12) 3Q23 2Q24 3Q24 Annuali
Slide 8: Year to date, Oportun would be profitable if non-recurring and non-cash impacts are excluded
Year to date, Oportun would be profitable if non-recurring and non-cash impacts are excluded $8 $7 $14 $47 $27 $(87) 3Q YTD GAAP Mark-to-market Mark-to-market Other non- (1) Stock-based 3Q YTD Adjusted Net Loss on credit cards on ABS notes recurring charges compensation Net Income expense Favorable
Slide 9: Improving credit performance
Improving credit performance Annualized Net Charge-off Rate(1) 30+ Day Delinquency Rate(1) 3Q24 rate would have been 11.1% had ADPB been flat Y/Y -34bps instead of 7% decline 12.3% 11.8% 11.9% 5.5% 5.0% 5.2% 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 (1) See Appendix for definition of 30+ Day Delinquency Rate an
Slide 10: More recent vintages outperforming 1H22 vintages in net lifetime loss rate
More recent 3Q22-3Q23 quarterly vintages are outperforming 1H22 vintages in net lifetime loss rate by month on book(1) ~400bps lower front book losses 12+ months post- disbursement (1) 3Q22 vintage only includes August and September 2022; please see slides 19 and 20 for definitions of Front Book and
Slide 11: Pre-July 2022 credit tightening back book continues to shrink
Pre-July 2022 credit tightening back book continues to shrink Quarter-End Back Book Portfolio % of Owned Principal Balance Outstanding (1) 3Q24 Annualized Net Charge-Off Rate Front Book 10.4 % Back Book 23.7 % 61% 24% of 3Q24 gross charge-offs 21% 16% 4% 11% 8% YE22 YE23 1Q24 2Q24 3Q24 YE24 E Pre-Ju
Slide 12: Ready to return to originations growth
Ready to return to originations growth Year-Over-Year Aggregate Originations Growth -1% -10% -17% -24% -28% -45% -49% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 12
Slide 13: Operating expenses and Adjusted OpEx Ratio sharply down since 3Q22
Operating expenses and Adjusted OpEx Ratio sharply down since 3Q22 major expense reduction initiatives Adjusted OpEx to Average Daily Principal Balance (%) $145.3 $143.6 (17)% $141.9 22.6% $132.7 $123.0 $116.4 19.4% 18.6% $107.3 17.5% $101.7 $94.1 $96.3 16.5% 15.6% 14.5% 14.3% 13.8% 13.9% 2Q22 3Q22
Slide 14: Third quarter 2024 capital and liquidity
Third quarter 2024 capital and liquidity Record 3Q24 $108M operating cash flow; two warehouse facilities totaling $552M and $223M ABS transaction executed; $235M corporate debt refinancing to be completed week of 11/11 Sources of Liquidity Net Change in Cash and Primary Drivers Operating Cash Flow T
Slide 15: Fourth quarter and Full Year 2024 guidance
Fourth quarter and Full Year 2024 guidance 4Q 2024E FY 2024E Total Revenue $246 - $250M $997 - $1,001M Annualized Net Charge-off Rate (%) 11.8% +/- 15 bps 12.0% +/- 10 bps Adjusted EBITDA (1) $28 - $30M $92 - $94M (1) See Appendix for Key Definitions and the revised Adjusted profitability metrics an
Slide 16: Dollar net charge-offs expected to decline ~9% in 2024
With dollar net charge-offs expected to decline ~9% in 2024, annualized net charge-off rates would be lower with flat-to-moderate ADPB growth As Reported (7-8% ADPB Declines) Flat ADPB 10% ADPB Growth 11.9% 12.0% 11.8% 11.1% 11.1% 10.9% 10.1% 10.1% 9.9% 3Q24 Actual 4Q24 Guidance Midpoint FY24 Guidan
Slide 17: Attractive unit economic model
Attractive unit economic model 3Q24 Adjusted ROE of 1.1% a 1,147 bps Y/Y improvement from (10.4)% in 3Q23 Illustrative Unit Economics as a % of Owned Principal Balance Corporate Level Profitability = = = = = A B Total C Net D Risk E F 1 APR Non-Interest Revenue Cost of Interest Net Charge Adjusted O
Slide 18: Appendix
Appendix
Slide 19: Key definitions
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 financial
Slide 20: 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 21: Reduced OpEx and credit losses drive 117% Y/Y improvement in Adjusted EBITDA
Reduced OpEx and credit losses drive $17M, 117% Y/Y improvement in Adjusted EBITDA during 3Q24, $55M YTD Adjusted EBITDA ($M)(1) $17M $55M $64 $30 $31 $14 $8.9 3Q23 2Q24 3Q24 YTD 2023 YTD 2024 Adjusted EBITDA Margin (%)(1) Adjusted EBITDA Margin (%)(1) 5.4% 12.1% 12.5% 1.1% 8.5% (1) Beginning 1Q24,
Slide 22: 3Q Y/Y $13M Adjusted Net Income increase
3Q Y/Y $13M Adjusted Net Income increase principally driven by expense reductions and lower net charge-offs Adjusted Net Income (Loss) ($M)(1) $13M $71M $3.2 $7.8 $0.9 $(11.8) $(63) 3Q23 2Q24 3Q24 YTD 2023 YTD 2024 Adjusted ROE (%)(1) Adjusted ROE (%)(1) (10.4)% 3.5% 1.1% (17.1)% 2.8% (1) Beginning
Slide 23: Owned Principal Balance substantially flat Q/Q as Aggregate Originations increase
Owned Principal Balance substantially flat Q/Q as Aggregate Originations increase Q/Q in line with typical seasonal pattern Owned Principal Balance at EOP ($B) Aggregate Originations ($M) (7)% (1)% 0.5% $2.9 10% $2.7 $2.7 $483 $480 $435 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 23
Slide 24: 3Q Total Revenue resilient, down (7)% Y/Y
3Q Total Revenue Total Revenue ($M) $794 $751 resilient, down (7)% (7)% Y/Y $268 $250 $250 3Q24 Highlights Total Revenue: $250M, down 7% Y/Y; lower 3Q23 2Q24 3Q24 YTD YTD average daily principal 2023 2024 balance on conservative underwriting partially offset by higher portfolio Net Revenue ($M) $209
Slide 25: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Nine Months Ended September 30 Change Change 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Aggregate Originations (Millions) $ 480.2 $ 434.8 $ 338.2 $ 437.3 $ 482.7 (0.5) % $ 1,253.1 $ 1,375.8 (8.9) % Portfolio Yield (%) 33.2 % 33.9 % 32.5 % 32.7 % 32.5 %
Slide 26: 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) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Interest income $ 230.0 $ 231.4 $ 230.6 $ 242.2 $ 243.3 (5.4) % $ 692.0 $ 721.3 (4.1) % Non-interest i
Slide 27: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y Cash and cash equivalents $ 71.8 $ 72.9 $ 69.2 $ 91.2 $ 81.9 (12.3) % Restricted cash 156.7 163.8 127.4 114.8 117.8 33.1 % Total cash $ 228.5 $ 236.6 $ 196.6 $ 206.0 $ 199.6 14.5 % Loans receivable at
Slide 28: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Nine Months Ended September 30, Change Change ($ Millions) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ (30.0) $ (31.0) $ (26.4) $ (41.8) $ (21.1) (41.7) % $(87.4) $(138.1) Adjustments: Income tax expense (benefit) (9.5) (18.1) (4.0) (15
Slide 29: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Nine Months Ended September 30, Change Change ($ Millions) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ (30.0) $ (31.0) $ (26.4) $ (41.8) $ (21.1) (41.7)% $ (87.4) $ (138.1) 36.7 % Adjustments: Income tax expense (benefit) (9.5) (18.
Slide 30: Adjusted operating expense and ratio reconciliation
Adjusted operating expense, adjusted operating efficiency and adjusted operating expense ratio reconciliation Quarter Ended Nine Months Ended September 30 Change Change ($ Millions) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Operating Efficiency 40.8 % 43.6 % 43.8 % 49.3 % 45.7 % 42.7 % 51.0 % Total
Slide 31: 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) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ (30.0) $ (31.0) $ (26.4) $ (41.8) $ (21.1) (41.7) % $ (87.4) $ (138.1)
Slide 32: 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) 3Q24 2Q24 1Q24 4Q23 3Q23 Y/Y 2024 2023 Y/Y Diluted earnings (loss) per share $ (0.75) $ (0.78) $ (0.68) $ (1.09) $ (0.55) (36.4) % $ (2.21) $
Slide 33: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 4Q 2024 FY 2024 ($ Millions) Low High Low High Net (loss) $ (12.1) * $ (10.6) * $ (47.8) * $ (46.2) * Adjustments: Income tax expense (benefit) (3.4) (2.9) (12.9) (12.5) Interest on corporate financing 10.1 10.1 49.8 49.8 Depreciation and amortization 1
Slide 34: Forward looking adjusted net income and adjusted EPS reconciliation
Forward looking adjusted net income and adjusted earnings per share reconciliation FY 2025 ($ Millions, except per share data. Shares in Millions) Low High Net Income (loss) $ 12.6 $ 25.1 Adjustments: Income tax expense (benefit) 4.7 9.3 Stock-based compensation expense 14.4 14.4 Other non-recurring
Slide 35: Net change in fair value
Quarter Ended Change $ Millions 3Q24 2Q24 3Q23 2Q23 Q/Q Y/Y Net change Loan Portfolio Drivers in fair value Discount rate 8.3 % 8.7 % 11.2 % 11.1 % (0.3)% (2.8)% Remaining cumulative charge-offs as a % of principal balance 11.9 % 11.6 % 11.9 % 11.4 % 0.4 % —% Average life in years 1.11 1.02 1.00 0.9
Slide 36: Fair value estimate methodology
Fair value Quarter Ended estimate Change 3Q24 2Q24 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y methodology Weighted average portfolio yield over the 26.96 % 28.42 % 28.87 % 29.10 % 29.58 % 29.85 % 29.61 % (2.62) % remaining life of the loans Loans receivable at fair Less: Servicing fee (5.00) % (5.00) % (5.00) % (
Slide 37: Net lifetime loan loss rates by vintage
Net lifetime loan loss rates by vintage Year of Origination 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Dollar Weighted Average Original Term for Vintage (Months) 19.1 22.3 24.2 26.3 29.0 30.0 32.0 33.3 37.8 39.2 Net Lifetime Loan Losses as % of Original Principal Balance 6.1% 7.1% 8.0% 8.2% 9