Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Investor Presentation (May 2023)
47 slides from Oportun Financial's investor presentation, May 2023
Slide 1: Smart Borrowing, Savings, Budgeting, Spending for hardworking people
Smart Borrowing, Savings, Budgeting, Spending for hardworking people Investor Presentation | May 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 concerning the effectiveness of our cost-cutting measures in strengthen
Slide 3: Company Overview
Company Overview Oportun
Slide 4: Oportun at a glance
Oportun at a glance $997M 1.9M 2.1M 7 years LTM total revenue, Members using our Products that help Profitability on an 2023 Y/Y projected seven credit and our members borrow, adjusted basis revenue growth of digital banking save, budget and between ‘15-’22 2-5% as we focus on products spend credit
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 Comprehensive Growth driven by Product design customer insights product suite designed to long-term member fo
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, budgeting, and spending 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: Comprehensive set of financial products
Comprehensive set of financial products A profitable lending platform combined with savings, banking, and investing products 8
Slide 9: Responsibly structured credit products
Responsibly structured credit products 2023 Priority Member Personal Secured Credit Solution Loans Personal Loans Card Avg Loan Size $4,290(6) $7,654(6) $827(7) Avg Term 39 months 50 months N/A Avg $ APR 32.1% 28.2% 29.8% Use Case Simple-to-understand, affordable, Personal installment loan product A
Slide 10: 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 $1,900 savings $2,439 Credit histories $2,495 established(9) $1,310 $1,027 Certified by the US Treasury $512 Department Online-only Online Single-Pay Auto Payd
Slide 11: Savings product is also a 2023 priority
Savings product is also a 2023 priority Effortless saving | Unlimited goals | Help reduce overdrafts Problem Solution Impact A.I.-driven 57% saving $9.2B+ of U.S. consumers would that helps members saved for members struggle to come up with effortlessly save since 2015 $1,000 in the event of an towa
Slide 12: 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 13: New Oportun Mobile App
New Oportun Mobile App: Building long-term, highly engaged relationships with our members • Expected to drive increased cross- selling, higher conversions and lower customer acquisition costs • Fully launched as of mid-February; over 400,000 members have signed up to use • Convenient single-access p
Slide 14: Fortifying Business Economics
Fortifying Business Economics
Slide 15: 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 ◦ Most of February-enacted $48-53M run rate savings program to be realized starting 2Q
Slide 16: 1Q23 operating expenses to owned portfolio more efficient than 2019
1Q23 operating expenses to owned portfolio more efficient than 2019 Opex to Average Daily Principal Balance (%) Adjusted Opex to Average Daily Principal Balance (%) 20.6% 20.1% 19.1% 16.3% 16.4% 14.7% 1Q19 1Q23 1Q23 Pro 1Q19 1Q23 1Q23 Pro Forma (11) Forma (11) Opex Ratio Adjusted Opex Ratio GAAP ope
Slide 17: Strong risk-adjusted yield drives profitability
Strong risk-adjusted yield drives profitability 31.4% 19.8% (11.6)% 14.8% (5.0)% (12) Gross Yield Net Charge-Offs Risk-Adjusted Yield Servicing Fees Unlevered (13) Contribution Yield 17
Slide 18: First Payment Defaults driven down to 2019 pre-pandemic levels
First Payment Defaults driven down to 2019 pre-pandemic levels 3% 2% 1% 0% 8 4 8 1 18 22 5 1 5 /9 15 19 3 29 2 7 13 16 21 27 30 4 10 4 18 24 /1 4/ 1/ 3/ /2 9/ /2 /2 7/ 8/ 2/ /1 1/ 5/ 3/ 4/ 8/ 9/ 2/ 12 6/ 7/ 5/ 4/ 6/ 11 9/ 10 12 10 11 2019 2022 2023 First Payment Defaults are calculated as the princi
Slide 19: Post-July credit tightening loans performing better or near 2019 vintages
Post-July credit tightening loans are performing better or near 2019 pre- pandemic vintages and growing in proportion Quarter-End Back Book Personal Loans 30+ Day Delinquency Rates14 Portfolio Outstanding ($B)15 Pre-July 2022 Credit Tightening September October November December January Vintage Vint
Slide 20: Long-Term Strategic Priorities
Long-Term Strategic Priorities
Slide 21: 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 22: Environmental, Social & Governance (ESG) Impact
Environmental, Social & Governance (ESG) Impact Less Expensive Credit(16) Employee Diversity(18) Interest and Fees Saved(16) 6x less on avg vs. lending alternatives 82% in the U.S. identify as members $2.4B+ for people with little or no credit history of an underrepresented group; saved cumulatively
Slide 23: Experienced management team with expertise across products and industries
Experienced management team with expertise across products and industries Raul Vazquez Jonathan Coblentz Patrick Kirscht Chief Executive Officer and Chief Financial Officer and Chief Credit Officer Board Member Chief Administrative Officer 25+ years in Consumer Finance in 20+ years in High Tech and
Slide 24: Financial Overview
Financial Overview Oportun
Slide 25: Revenue growth remains resilient despite tightened originations
Revenue growth remains resilient despite tightened originations in uncertain macroeconomic environment Aggregate Originations ($M) Fair Value Pro Forma Total Revenue ($M)* 4% ´23E / ´22 (49)% 21% $975 - $1,000 $953 $2,923 $2,295 $598 $2,052 $627 $800 $584 $260 $1,348 $408 $215 2019 2020 2021 2022 1Q
Slide 26: 1Q Adjusted Net Loss driven by non-cash fair value marks
1Q Adjusted Net Loss driven by non-cash fair value marks; significant second half Adjusted EBITDA implied by guidance Adjusted Net Income (Loss) ($M)* Adjusted EBITDA ($M)* +$83M ´23E vs ´22 $74 $70 - $75 $63 $79 $69 $47 $34 $53 $22 $(10) $(14) $(88) $(24) 2019 2020 2021 2022 1Q22 1Q23 2019 2020 202
Slide 27: Appendix
Appendix
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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 46: 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 47: Investor Contact
Investor Contact Dorian Hare 650-590-4323 ir@oportun.com