Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Q4 2024 Earnings Presentation
39 slides from Oportun Financial's earnings presentation, Feb 12, 2025
Slide 1: 4Q 2024 Earnings Presentation
4Q 2024 Earnings Presentation February 12, 2025 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: 4Q24 Earnings Overview
4Q24 Earnings Overview Returned to GAAP profitability in 4Q24; expect to be GAAP Profitable for FY25 - $9M in 4Q Net Income, up $51M Y/Y; Achieved 10.2% ROE Strong Q4 signifies turning the corner on improving financial performance - Adjusted Net Income of $22M, up $30M Y/Y; 25.2% Adjusted ROE - Adju
Slide 4: Made significant progress on strategic priorities in 2024
Made significant progress on strategic priorities in 2024... Identifying High-Quality Improving Credit Outcomes Fortifying Business Economics Originations • Front book NCO rate of 10.5% • 4Q24 Adjusted ROE of 25.2%; • Returned to growth with 4Q24 vs. 24.7% back book 33 percentage point Y/Y originati
Slide 5: Capitalizing on momentum to execute key priorities in 2025
... And capitalizing on momentum to execute key priorities in 2025 Identifying High-Quality Improving Credit Outcomes Fortifying Business Economics Originations • Lower FY25 NCO rate by 50 • Attain Adjusted ROE in the • Grow originations 10-15% over bps at midpoint guidance to teens full year 11.5%
Slide 6: Fourth quarter performance vs. guidance
Fourth quarter performance vs. guidance 4Q 2024 Guidance 4Q 2024 Actual Total Revenue $246 - $250M $251M Annualized Net Charge- 11.8% +/- 15 bps 11.7% Off Rate (%) Adjusted EBITDA (1) $28 - $30M $41M (1) See Appendix for Key Definitions and non-GAAP reconciliation to the most comparable GAAP measure
Slide 7: Fourth quarter 2024 highlights
Fourth quarter 2024 highlights GAAP Net Income (Loss) and Adjusted Net Financial Highlights Income (Loss) Trends ($M)(1) Total Revenue GAAP Net Income $22 $251M $8.7M $9 $1 Adjusted EBITDA(1) Adjusted Net Income(1) $(8) $41M $22M GAAP Diluted EPS Adjusted EPS(1) $0.20 $0.49 $(30) $(42) Annualized Ne
Slide 8: Improvement in net lifetime loss rate up to 500 bps by month 12
Improvement in net lifetime loss rate increases from 400 bps to up to 500 bps by month 12 on book(1) Up to 500 bps lower front book losses 12+ months post-disbursement (1) 3Q22 vintage only includes August and September 2022; please see slides 20 and 21 for definitions of Front Book and Back Book. 8
Slide 9: Back book decreased to 5% of portfolio at YE24
Back book from pre-July 2022 credit tightening has decreased to 5% of portfolio at YE24; anticipated reduction to 1% by YE25 Quarter-End Back Book Portfolio % of Owned Principal Balance Outstanding (1) 4Q24 Annualized Net Charge-Off Rate Front Book 10.5 % Back Book 24.7 % 61% 18% of 4Q24 gross charg
Slide 10: Net charge-off and delinquency rates declined year-over-year and sequentially
Net charge-off and delinquency rates declined materially year-over- year and sequentially Annualized Net Charge-off Rate(1) 30+ Day Delinquency Rate(1) -55bps -113bps 12.3% 11.9% 5.9% 11.7% 5.2% 4.8% 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 (1) See Appendix for definition of 30+ Day Delinquency Rate and Annual
Slide 11: Disciplined originations growth resumed in 4Q24
Disciplined originations growth resumed in 4Q24 Year-Over-Year Aggregate Originations Growth 19% -1% -10% -17% -24% -28% -45% -49% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 11
Slide 12: Operating expenses down sharply, improving Adjusted OpEx Ratio
Operating expenses down sharply, driving a significant improvement in Adjusted OpEx Ratio 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% $89.2 14.5% 14.3% 13.8% 13.9% 13.1% 2Q22 3Q22 4
Slide 13: Disciplined credit stance reflects member stability
Disciplined credit stance reflects member stability: Strong employment and residential stability, with 91% of loans disbursed to U.S. bank accounts Income Verified Loan Disbursement 100% 91% Of applicants, ~$50K Of borrowers receive in median gross income U.S. bank accounts Employment Stability Resi
Slide 14: Fourth quarter 2024 capital and liquidity
Fourth quarter 2024 capital and liquidity Reduced leverage from 8.7x to 7.9x, while repaying $48M of debt during 4Q; $425M January 2025 ABS financing at 6.95% average yield was 127 bps lower than prior August 2024 transaction Sources of Liquidity Net Change in Cash and Primary Drivers Fixed Rate Deb
Slide 15: First quarter and Full Year 2025 guidance
First quarter and Full Year 2025 guidance 1Q 2025E FY 2025E Total Revenue $225 - $230M $945 - $970M Annualized Net Charge-off Rate (%) 12.30% +/- 15 bps 11.5% +/- 50 bps Adjusted EBITDA (1) $18 - $22M $135 - $145M Adjusted Net Income (1) — $53 - $63M Adjusted EPS (1) — $1.10 - $1.30 Based on 48.2M F
Slide 16: Expected annualized NCO rate with flat portfolio growth
With dollar net charge-offs expected to decline ~4% in 1Q25, expected annualized NCO rate would be ~80 bps lower with flat portfolio growth Y/Y As Reported ADPB Decline -8% -7% -3% Y/Y $NCO Decline -12% -4% -7% Note: Analysis assumes charge-offs in dollars is the same within each of the three time p
Slide 17: Attractive unit economic model
Attractive unit economic model 4Q24 Adjusted ROE of 25.2% was a 33 percentage point Y/Y improvement from (7.7)% in 4Q23 Illustrative Unit Economics as a % of Owned Principal Balance Corporate Level Profitability = = = = = A B Total C Net D Risk E F 1 Loan Non-Interest Revenue Cost of Interest Net Ch
Slide 18: Key drivers to reach ROE target
Key drivers to reach ROE target Reductions as a percentage of owned principal balance Note: FY24 figures is Adjusted ROE because adjusted metrics remove impact of one-time items; Target ROE is GAAP. 18
Slide 19: Appendix
Appendix
Slide 20: Key definitions
Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit cards receivable that are 30 or more calendar days contractually past due as of the end of the period divided by Owned Principal Balance as of such date • Adjusted EBITDA is a non-GAAP financial
Slide 21: Key definitions (cont'd)
Key definitions (cont’d) • Customer Acquisition Cost (or "CAC") is calculated as sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand marketing and the costs associated with our telesales and retail
Slide 22: 4Q24 performance: Significant Y/Y improvement on key metrics
4Q24 performance: Significant Y/Y improvement on key metrics Portfolio Yield Risk Adjusted Yield 34.2% 5 b ps +1 5 9 bps 22.5% +20 32.7% 20.4% 4Q23 4Q24 4Q23 4Q24 Net Charge-offs ($M) Adjusted Operating Expense ($M) -16.9 $107 % $91 -12.0% $89 $80 4Q23 4Q24 4Q23 4Q24 22
Slide 23: Adjusted EBITDA growth of $31M Y/Y in 4Q24
Reduced OpEx and credit losses drove $31M (315% Y/Y) growth in Adjusted EBITDA during 4Q24; $86M FY increase Adjusted EBITDA ($M)(1) $31M $86M $105 $41 $31 $10 $19 4Q23 3Q24 4Q24 FY 2023 FY 2024 Adjusted EBITDA Margin (%)(1) Adjusted EBITDA Margin (%)(1) 3.8% 12.5% 16.3% 1.8% 10.4% (1) Beginning 1Q2
Slide 24: 4Q Adjusted Net Income increased $30M Y/Y
4Q Adjusted Net Income increased $30M Y/Y, principally driven by expense reductions and lower net charge-offs; $101M FY increase Adjusted Net Income (Loss) ($M)(1) $30M $101M $22 $29 $0.9 $(71) $(8.2) 4Q23 3Q24 4Q24 FY 2023 FY 2024 Adjusted ROE (%)(1) Adjusted ROE (%)(1) (7.7)% 1.1% 25.2% (15.0)% 7.
Slide 25: Owned Principal Balance and Aggregate Originations
Owned Principal Balance declined marginally Q/Q; Aggregate Originations increased Q/Q in line with typical seasonal pattern Owned Principal Balance at EOP ($B) Aggregate Originations ($M) (8)% 19% (2)% 2.9 9% 2.7 2.7 522 480 437 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 25
Slide 26: 4Q Total Revenue down 4% Y/Y
Total Revenue ($M) 4Q Total Revenue (5)% (4)% down 4% Y/Y (4)% $1,057 $1,002 $1,008 $968 $263 $250 $251 4Q24 Highlights Total Revenue: $251M, down 4% Y/Y; impacts from 4Q23 3Q24 4Q24 FY FY FY FY lower average daily 2023 2024 2023 2024 As reported Excluding Credit principal balance including Card the
Slide 27: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Year Ended December 31 Change Change 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Aggregate Originations (Millions) $ 522.2 $ 480.2 $ 434.8 $ 338.2 $ 437.3 19.4 % $ 1,775.3 $ 1,813.1 (2.1) % Portfolio Yield (%) 34.2 % 33.2 % 33.9 % 32.5 % 32.7 % 155 bps
Slide 28: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Year Ended December 31 Change Change ($ Millions, except per share data. Shares in Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Interest income $ 233.5 $ 230.0 $ 231.4 $ 230.6 $ 242.2 (3.6) % $ 925.5 $ 963.5 (3.9) % Non-interest income 17
Slide 29: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y Cash and cash equivalents $ 60.0 $ 71.8 $ 72.9 $ 69.2 $ 91.2 (34.2) % Restricted cash 154.7 156.7 163.8 127.4 114.8 34.7 % Total cash $ 214.6 $ 228.5 $ 236.6 $ 196.6 $ 206.0 4.2 % Loans receivable at
Slide 30: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Year Ended December 31, Change Change ($ Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ 8.7 $ (30.0) $ (31.0) $ (26.4) $ (41.8) NM $(78.7) $(180.0) Adjustments: Income tax expense (benefit) (4.8) (9.5) (18.1) (4.0) (15.5) 68.8 %
Slide 31: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Year Ended December 31, Change Change ($ Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ 8.7 $ (30.0) $ (31.0) $ (26.4) $ (41.8) NM $ (78.7) $ (180.0) 56.3 % Adjustments: Income tax expense (benefit) (4.8) (9.5) (18.1) (4.0) (
Slide 32: Adjusted operating expense and efficiency reconciliation
Adjusted operating expense, adjusted operating efficiency and adjusted operating expense ratio reconciliation Quarter Ended Year Ended December 31 Change Change ($ Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Operating Efficiency 35.7 % 40.8 % 43.6 % 43.8 % 49.3 % 41.0 % 50.6 % Total Revenue
Slide 33: Basic and diluted earnings per share reconciliation
Basic and diluted earnings per share reconciliation Quarter Ended Year Ended December 31 Change Change ($ Millions, except per share data. Shares in Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Net income (loss) $ 8.7 $ (30.0) $ (31.0) $ (26.4) $ (41.8) NM $ (78.7) $ (180.0) 56.3 % Net incom
Slide 34: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Quarter Ended Year Ended December 31 Change Change ($ Millions, except per share data. Shares in Millions) 4Q24 3Q24 2Q24 1Q24 4Q23 Y/Y 2024 2023 Y/Y Diluted earnings (loss) per share $ 0.20 $ (0.75) $ (0.78) $ (0.68) $ (1.09) NM $ (1.95) $ (4.88) 60.0 % Ad
Slide 35: Net change in fair value
Quarter Ended Change $ Millions 4Q24 3Q24 4Q23 3Q23 Q/Q Y/Y Net change Loan Portfolio Drivers in fair value Discount rate 7.9 % 8.3 % 10.1 % 11.2 % (0.4)% (2.2)% Remaining cumulative charge-offs as a % of principal balance 11.7 % 11.9 % 12.1 % 11.9 % (0.3)% (0.4)% Average life in years 1.11 1.11 1.0
Slide 36: Fair value estimate methodology
Fair value Quarter Ended estimate Change 4Q24 3Q24 2Q24 1Q24 4Q23 3Q23 2Q23 Y/Y methodology Weighted average portfolio yield over the 26.81 % 26.96 % 28.42 % 28.87 % 29.10 % 29.58 % 29.85 % (2.28) % 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
Slide 38: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 1Q 2025 FY 2025 ($ Millions) Low High Low High Net income (loss) $ (5.4) * $ (2.2) * $ 23.2 $ 33.4 Adjustments: Income tax expense (benefit) (1.3) (0.5) 6.3 9.0 Interest on corporate financing 9.2 9.2 36.7 36.7 Depreciation and amortization 10.6 10.6 40
Slide 39: 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) $ 23.2 $ 33.4 Adjustments: Income tax expense (benefit) 6.3 9.0 Stock-based compensation expense 15.0 15.0 Other non-recurring