Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Q1 2023 Earnings Presentation
32 slides from Oportun Financial's earnings presentation, May 8, 2023
Slide 1: 1Q 2023 Earnings Presentation
1Q 2023 Earnings Presentation May 8, 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, including statements concernin effectiveness of our cost-cutting measures in strengthening o
Slide 3: Earnings overview
Strong 21% Y/Y growth in 1Q revenue of $260M Earnings overview Average daily principal balance of $3.1B, up 27% Diligent expense management Key takeaways from Oportun's 48.5% Adjusted Operating Efficiency sets third consecutive quarterly first quarter 2023 results post-2019 IPO record Additional act
Slide 4: First quarter performance
First quarter performance 1Q 2023 Guidance 1Q 2023 Actual Drivers Higher average daily principal Total Revenue $245 - $250 M $260 M balance Annualized Net Charge-off Effective late-stage delinquency 12.5% +/- 15 bps 12.1% Rate (%) management Higher revenue, lower net charge- Adjusted EBITDA (1) $(49
Slide 5: Fortifying business economics
Fortifying business economics • 1Q adjusted operating expenses declined 8% sequentially from 4Q22; 48.5% adjusted operating efficiency ratio (post-IPO record) a 1,338 bps year-over-year improvement Cost Reductions ◦ Majority of February-enacted $48-53M run rate savings to start being realized in 2Q
Slide 6: 1Q23 operating expenses to owned portfolio more efficient than 2019
1Q23 operating expenses to owned portfolio more efficient than 2019 Opex to Average Daily Principal Balance (%) Adjusted Opex to Average Daily Principal Balance (%) 20.6% 20.1% 19.1% 16.3% 16.4% 14.7% 1Q19 1Q23 1Q23 Pro 1Q19 1Q23 1Q23 Pro (2) (2) Forma Forma (1) Opex Ratio Adjusted Opex Ratio GAAP o
Slide 7: Strategic priorities: focused on sustainable long-term growth & profitability
Strategic priorities: focused on sustainable long-term growth & profitability ~85% G&A allocation ~10% ~5% Fortify Core Business Strengthen Core Build Member Unsecured Personal Develop Product Suite Economics Engagement Platform Loan Product • Improve profitability and • Prioritize unit economics, •
Slide 8: First quarter 2023 highlights
First quarter 2023 highlights Financial Highlights Adjusted Operating Efficiency1 (1,338) bps Total Revenue GAAP Net Income $260M $(102)M 61.8% 52.4% 48.5% Adjusted EBITDA(1) Adjusted Net Income(1) $(24.5)M $(88.3)M GAAP Diluted EPS Adjusted EPS(1) 1Q22 4Q22 1Q23 $(3.00) $(2.60) Total revenue $215M
Slide 9: First Payment Defaults driven down to 2019 pre-pandemic levels
First Payment Defaults driven down to 2019 pre-pandemic levels 3% 2% 1% 0% 8 4 8 1 18 22 5 1 5 /9 15 19 3 29 2 7 13 16 21 27 30 4 10 4 18 24 /1 4/ 1/ 3/ /2 9/ /2 /2 7/ 8/ 2/ /1 1/ 5/ 3/ 4/ 8/ 9/ 2/ 12 6/ 7/ 5/ 4/ 6/ 11 9/ 10 12 10 11 2019 2022 2023 First Payment Defaults are calculated as the princi
Slide 10: Post-July credit tightening loans performing better or near 2019 vintages
Post-July credit tightening loans are performing better or near 2019 pre- pandemic vintages and growing in proportion Quarter-End Back Book Personal Loans 30+ Day Delinquency Rates1 Portfolio Outstanding ($B)2 Pre-July 2022 Credit Tightening September October November December January Vintage Vintag
Slide 11: Credit performance
Credit performance 1Q23 Annualized Net Charge-Off Rate declines sequentially by 70 basis points from 4Q22 Annualized Net Charge-off Rate (%)(1) 30+ Day Delinquency Rate (%)(1) 12.8% 12.1% 8.6% 5.6% 5.5% 4.5% 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 (1) See Appendix for definition of 30+ Day Delinquency Rate an
Slide 12: First quarter 2023 capital and liquidity
First quarter 2023 capital and liquidity Sources of Liquidity Net Change in Cash and Primary Drivers Operating Cash Flow Trend Fixed Rate Debt (%) ($M) ($M) ($M) $89 $517 $(2) $77 22% $68 -Net interest income $202 and operating $77 expenses $53 $39 -Net lending, loan 78% repayment and system $(40) $
Slide 13: Second quarter and Full Year 2023 guidance
Second quarter and Full Year 2023 guidance 2Q 2023E FY 2023E Total Revenue $250 - $255 M $975 - $1,000 M Annualized Net Charge-off Rate (%) 12.8% +/- 15 bps 11.6% +/- 40 bps Adjusted EBITDA (1) $2 - $7 M $70 - $75 M (1) See Appendix for Key Definitions and non-GAAP reconciliation to the most compara
Slide 14: Appendix
Appendix
Slide 15: Key definitions
Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit card receivables that are 30 or more calendar days contractually past due as of the end of the period divided by Owned Principal Balance as of such date • Adjusted EBITDA is a non-GAAP financial
Slide 16: Key definitions (cont'd)
Key definitions (cont’d) • Customer Acquisition Cost (or "CAC") is calculated as sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand marketing and the costs associated with our telesales and retail
Slide 17: 1Q Adjusted Net Loss driven by non-cash fair value marks
1Q Adjusted Net Loss driven by non-cash fair value marks Adj. EBITDA better than guidance Adjusted Net Income (Loss) ($M)(1) Adjusted EBITDA ($M)(1) (2) $(141) $(58) $53 $34 $4.6 $(24) $(34) $(88) 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Adjusted ROE (%)(1) Adjusted EBITDA Margin (%)(1) 34.1% 3.3% (71.3)% 15.8
Slide 18: 28% Y/Y growth in Owned Principal Balance drives revenue growth
28% Y/Y growth in Owned Principal Balance drives revenue growth despite credit tightening Owned Principal Balance at EOP ($B) Aggregate Originations ($M) 28% (49)% $3.1 $3.0 $800 $2.4 $610 $408 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 18
Slide 19: 1Q total revenue up 21% Y/Y
1Q total revenue up Total Revenue ($M) 21% Y/Y 21% $262 $260 1Q23 Highlights $215 Total Revenue: $260M 21% Y / Y Net Revenue: $4.8M 1Q22 4Q22 1Q23 (98)% Y / Y due to non- cash charges including net change in fair value Net Revenue ($M) decline of $216M (98)% $205 $143 $4.8 1Q22 4Q22 1Q23 19
Slide 20: Strong risk-adjusted yield drives profitability
Strong risk-adjusted yield drives profitability 31.4% 19.8% (11.6)% 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 three months ended 3/31/2023 as a % of Average Daily Principal Balance
Slide 21: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Change 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Members 1,911,592 1,877,260 1,858,335 1,818,588 1,676,754 14.0 % Products 2,059,007 2,006,245 1,981,310 1,928,261 1,757,339 17.2 % Aggregate Originations (Millions) $ 408.0 $ 610.4 $ 634.2 $ 878.2 $ 800.1 (49.0)% 30+
Slide 22: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Change ($ Millions, except per share data. Shares in Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Interest income $ 237.6 $ 244.1 $ 232.1 $ 207.7 $ 192.2 23.6 % Non-interest income 21.9 17.8 18.0 18.1 22.5 (2.6) % Total revenue $ 259.5 $ 261.9 $ 250.1
Slide 23: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Cash and cash equivalents $ 74.1 $ 98.8 $ 175.9 $ 66.7 $ 109.9 (32.6) % Restricted cash 127.8 105.0 96.4 67.1 60.7 110.6 % Total cash $ 201.9 $ 203.8 $ 272.2 $ 133.9 $ 170.6 18.4 % Loans receivable at
Slide 24: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Change ($ Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Net income (loss) $ (102.1) $ (8.4) $ (105.8) $ (9.2) $ 45.7 NM Adjustments: Income tax expense (benefit) (39.4) 0.5 (6.5) (3.5) 12.0 NM Interest on corporate financing 6.3 5.1 0.9 — — NM Depreciation and a
Slide 25: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Change ($ Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Net income (loss) $ (102.1) $ (8.4) $ (105.8) $ (9.2) $ 45.7 NM Adjustments: Income tax expense (benefit) (39.4) 0.5 (6.5) (3.5) 12.0 NM Stock-based compensation expense 4.5 6.9 7.1 6.9 6.8 (33.6)% Work
Slide 26: Adjusted operating efficiency and adjusted operating expense reconciliation
Adjusted operating efficiency and adjusted operating expense reconciliation Quarter Ended Change ($ Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y 1Q19 Operating Efficiency 56.4 % 57.8 % 103.7 % 69.9 % 68.6 % 56.9 % Total Revenue $ 259.5 $ 261.9 $ 250.1 $ 225.8 $ 214.7 20.9 % $ 137.4 Total operating expense
Slide 27: Basic and diluted earnings per share reconciliation
Basic and diluted earnings per share reconciliation Quarter Ended Change ($ Millions, except per share data. Shares in Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Net income (loss) $ (102.1) $ (8.4) $ (105.8) $ (9.2) $ 45.7 NM Net income (loss) attributable to common stockholders $ (102.1) $ (8.4) $ (105
Slide 28: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Quarter Ended Change ($ Millions, except per share data. Shares in Millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Y/Y Diluted earnings (loss) per share $ (3.00) $ (0.25) $ (3.21) $ (0.28) $ 1.37 NM Adjusted Net Income $ (88.3) $ 4.6 $ 8.4 $ 3.8 $ 52.7 NM Basic weighted
Slide 29: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 2Q23 FY 2023 ($ Millions) Low High Low High Net (loss)* $ (35.7) * $ (31.5) * $ (34.3) * $ (29.8) * Adjustments: Income tax expense (benefit) 1.3 2.1 (20.1) (19.6) Interest on corporate financing 8.8 8.8 31.1 31.1 Depreciation and amortization 14.0 14.0
Slide 30: Net change in fair value
Quarter Ended Change Net change $ Millions 1Q23 4Q22 1Q22 4Q21 Q/Q Y/Y in fair value Loan Portfolio Drivers Discount rate 11.1 % 11.5 % 6.8 % 6.9 % (0.4)% 4.3 % Remaining cumulative charge-offs as a % of principal balance 11.7 % 10.4 % 10.4 % 9.6 % 1.3 % 1.4 % Average life in years 0.96 1.00 0.85 0.
Slide 31: Fair value estimate methodology
Fair value Quarter Ended Change estimate 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 Y/Y methodology Weighted average portfolio yield over the remaining life of the loans 29.78 % 29.50 % 29.90 % 30.27 % 30.15 % 30.14 % 30.35 % (0.37) % Less: Servicing fee (5.00) % (5.00) % (5.00) % (5.00) % (5.00) % (5.00) %
Slide 32: 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