Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Investor Presentation (November 2023)
45 slides from Oportun Financial's investor presentation, November 2023
Slide 1: Investor Presentation | November 2023
Investor Presentation | November 2023
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: Company Overview
Company Overview Oportun
Slide 4: Oportun at a glance
Oportun at a glance $1.1B 2.1M 2.3M 7 years LTM total revenue, Members using our Products that help Profitability on an 2023 Y/Y projected intelligent our members borrow, adjusted basis revenue growth of borrowing, savings save, and budget between ‘15-’22 ~11% and budgeting products Growth Members P
Slide 5: Investment highlights
Investment highlights A.I.-Enabled Digital- Unmatched Highly Mission- First Platform Digital Banking Attractive Long-Term Driven Models built on Platform Growth Focus 17 years of proprietary Product suite designed to Growth driven by Product design customer insights meet the everyday long-term membe
Slide 6: Mission and Vision
Mission Empowering members to build a better future Vision Be the leading A.I.-driven, digital-first platform helping hardworking individuals meet their borrowing, savings, and budgeting needs 6
Slide 7: Addressing the biggest challenges facing U.S. consumers
Addressing the biggest challenges facing U.S. consumers of U.S. households struggle with spending, saving, 69% borrowing and planning(2) 57% 48% 60% 90% would struggle to with checking are not confident think that being 85% come up with accounts about their financially healthy $1,000 in an overdraft
Slide 8: Responsibly structured credit products
Responsibly structured credit products 2023 Priority 1H24 Expansion Exploring Strategic Options Member Personal Secured Credit Solution Loans Personal Loans Card Avg Loan Size $4,036(6) $7,190(6) $990(7) Avg Term 40 months 51 months N/A Avg $ APR 32.6% 28.6% 29.8% Use Case Simple-to-understand, affo
Slide 9: We deliver significant savings compared to alternatives
We deliver significant savings compared to alternatives Cost of borrowing $1,500(8) Positive social impact $3,562 $3,490 $3,141 Approx. 1.1M $2,000 savings $2,439 Credit histories $2,495 established(9) $1,310 $1,027 Certified by the US Treasury $476 Department Online-only Online Single-Pay Auto Payd
Slide 10: Savings product is also a 2023 priority
Savings product is also a 2023 priority #1 savings app of 2023 according to Bankrate Effortless saving | Unlimited goals | Help reduce overdrafts 8 best money savings apps of 2023 Problem Solution Impact A.I.-driven 57% saving $9.9B+ of U.S. consumers would that helps members saved for members strug
Slide 11: Oportun ranks amongst leading brands in 2023 J.D. Power Survey
Oportun ranks amongst leading brands in 2023 J.D. Power Consumer Finance Satisfaction Survey Overall Customer Satisfaction Index Ranking 775 772 769 769 756 744 744 740 732 731 725 721 717 716 714 711 710 698 642 American Best Egg Discover SoFi Wells Oportun Segment Lightstream Citi Lending Prosper
Slide 12: Fortifying Business Economics
Fortifying Business Economics
Slide 13: Fortifying business economics
Fortifying business economics • 3Q23 Operating Expenses of $123M, lowest quarterly figure in 2 years • 40.8% Adjusted Operating Efficiency; 5th consecutive quarterly post-2019 IPO Cost Reductions record • Targeting $105M in run rate GAAP operating expense by Q4 2024 with further reductions • Focused
Slide 14: 3Q23 OpEx to average managed principal balance more efficient than 2019
3Q23 OpEx to average managed principal balance significantly more efficient than 2019 Opex to Average Managed Principal Balance (%) Adjusted Opex to Average Managed Principal Balance (%) 20.4% 18.1% 15.0% 13.4% 3Q19 3Q23 3Q19 3Q23 Opex Ratio Adjusted Opex Ratio See Appendix for Key Definitions and a
Slide 15: Strong risk-adjusted yield drives profitability
Strong risk-adjusted yield drives profitability 32.0% 19.8% (12.2)% 14.8% (5.0)% (11) (12) Gross Yield Net Charge-Offs Risk-Adjusted Yield Servicing Fees Unlevered Contribution Yield 15
Slide 16: Post-July 2022 credit tightening loans performing near-to-better than 2019
Post-July 2022 credit tightening loans are performing near-to-better than 2019 pre-pandemic vintages and growing in proportion Quarter-End Back Book Net-Charged Off Rates 30+ Day DQ Rate Portfolio Outstanding ($B)(14) Q3 Vintage (13) Q4 Vintage Q1 Vintage Q2 Vintage (MoB 12) (MoB 9) (MoB 6) (MoB 3)
Slide 17: Long-Term Strategic Priorities
Long-Term Strategic Priorities
Slide 18: 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 19: Environmental, Social & Governance (ESG) Impact
Environmental, Social & Governance (ESG) Impact Less Expensive Credit(15) Employee Diversity(17) Interest and Fees Saved(15) 7x less on avg vs. lending alternatives 82% in the U.S. identify as members $2.4B+ for people with little or no credit history of an underrepresented group; saved cumulatively
Slide 20: Experienced management team with expertise across products and industries
Experienced management team with expertise across products and industries Raul Vazquez Jonathan Coblentz Chief Executive Officer and Chief Financial Officer and Board Member Chief Administrative Officer 20+ years in Consumer Finance, High 25+ years in Consumer Finance Tech and Retail Patrick Kirscht
Slide 21: Financial Overview
Financial Overview Oportun
Slide 22: 3Q23 Earnings Overview
3Q23 Earnings Overview Focused on growing cash generation and enhancing shareholder returns 7% Y/Y growth in total revenue to record $268M Lowest quarterly operating expense in 2 years at $123M Ahead of schedule with reductions, down 10% Q/Q; new post-IPO low 40.8% Adjusted Operating Efficiency Addi
Slide 23: Revenue growth remains resilient despite tightened originations
Revenue growth remains resilient despite tightened originations in uncertain macroeconomic environment Aggregate Originations ($M) Fair Value Pro Forma Total Revenue ($M) 11% 7% (24)% ´23E / ´22 $1,054 - $1,059 $953 $2,923 $2,295 $598 $2,052 $627 $634 $268 $584 $1,348 $483 $250 2019 2020 2021 2022 3
Slide 24: 3Q Adjusted Net Loss driven by non-cash fair value marks
3Q Adjusted Net Loss driven by non-cash fair value marks, higher net charge-offs and interest expense Adjusted Net Income (Loss) ($M) Adjusted EBITDA ($M) +$13M ´23E vs ´22 $74 $63 $79 $69 $47 $16 $8.4 $22 $0.5 - $5.5 $(18) $(10) $(6.2) $(14) 2019 2020 2021 2022 3Q22 3Q23 2019 2020 2021 2022 2023E 3
Slide 25: Appendix
Appendix
Slide 26: Key definitions
Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit card receivables that are 30 or more calendar days contractually past due as of the end of the period divided by Owned Principal Balance as of such date • Adjusted EBITDA is a non-GAAP financial
Slide 27: Key definitions (cont’d)
Key definitions (cont’d) • Customer Acquisition Cost (or "CAC") is calculated as sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand marketing and the costs associated with our telesales and retail
Slide 28: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Nine Months Ended September 30 Change Change 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y 2023 2022 Y/Y Members 2,098,172 2,005,008 1,911,592 1,877,260 1,858,335 12.9 % 2,098,172 1,858,335 12.9 % Products 2,259,464 2,155,240 2,059,007 2,006,245 1,981,310 14.0 % 2,259,
Slide 29: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Nine Months Ended September 30 Change Change ($ 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 30: Condensed fair value pro forma income statement reconciliation
Condensed fair value pro forma income statement reconciliation Year Ended Year Ended Year Ended December 31, 2021 December 31, 2019 (1) December 31, 2020 ($ Millions) As As FV FV As FV FV Reported Reported Adjustment Pro Forma Reported Adjustment Pro Forma Interest income $ 575.8 $ 545.5 $ — $ 545.5
Slide 31: 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
Slide 32: Condensed fair value pro forma balance sheet reconciliation
Condensed fair value pro forma balance sheet reconciliation Year Ended Year Ended Year Ended December 31, 2021 (1) December 31, 2020 December 31, 2019 ($ Millions) As Reported As Reported FV Adjustment FV Pro Forma As Reported FV Adjustment FV Pro Forma Cash and cash equivalents $ 131.0 $ 136.2 $ —
Slide 33: 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) $(69.3) (99.3)% Adjustments: Income tax expense (benefit) (16.2) (2.6) (3
Slide 34: Adjusted EBITDA historical full-year reconciliation
Adjusted EBITDA historical full-year reconciliation Year Ended December 31 ($ Millions) 2021 2020 2019 Net income (loss) $ 47.4 $ (45.1) $ 61.6 Adjustments: Fair Value Pro Forma net income adjustment (1) $ — $ 0.9 $ (13.2) Income tax expense (benefit) 15.4 (12.3) 17.8 COVID-19 expenses (2) — 4.6 — D
Slide 35: 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 36: Adjusted net income historical full-year reconciliation
Adjusted net income historical full-year reconciliation Year Ended ($ Millions) 2021 2020 2019 Net income (loss) $ 47.4 $ (45.1) $ 61.6 Adjustments: Fair Value Pro Forma net income adjustment (1) — 0.9 (13.2) Income tax expense (benefit) 15.4 (12.3) 17.8 COVID-19 expenses (2) — 4.6 — Impairment (3)
Slide 37: 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 38: Basic and diluted earnings per share reconciliation
Basic and diluted earnings per share reconciliation 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 Net income (loss) $ (21.1) $ (14.9) $ (102.1) $ (8.4) $ (105.8) 80.0 % $ (138.1) $ (69.3)
Slide 39: 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 40: 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 41: 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 42: 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 43: 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
Slide 44: Endnotes
Endnotes 1. FINRA Investor Education Foundation Study, February 2021 2. Financial Health Network (FHN): “Financial Health Pulse™ 2022 U.S. Trends Report” 3. GoBankingRates Survey, December 2021 4. Financial Health Network: “The FinHealth Spend Report 2022” 5. BAMM population survey, Oct 2019 6. Calc
Slide 45: Investor Contact
Investor Contact Dorian Hare 650-590-4323 ir@oportun.com
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