Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Investor Presentation (May 2024)
46 slides from Oportun Financial's investor presentation, May 2024
Slide 1: Investor Presentation | May 2024
Investor Presentation | May 2024
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 $61M $18.2B $10.5B 2023 total revenue, 1Q24 increase in Y/Y In responsible and Savings deposited for Y/Y growth of ~11% Adjusted Net affordable credit members since 2015, Income in return to provided since since at an average of profitability; expect inception $1,800 per ye
Slide 5: Investment highlights
Investment highlights A.I.-Enabled Digital- Addressing two Highly Mission- First Platform fundamentally Attractive Long-Term Driven Models built on challenging problems Growth Focus 17 years of proprietary Helping provide financial Growth driven by strong Product design customer insights health and
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% 55% 90% would struggle to with checking of Americans think that being 85% come up with accounts remain financially healthy $1,000 in an overdrafted in disc
Slide 8: Responsibly structured credit products
Responsibly structured credit products 2024 Priority 1H24 Expansion Exploring Strategic Options Member Personal Secured Credit Solution Loans Personal Loans Card Avg Loan Size $2,993(7) $6,234(7) $998(8) Avg Term 41 months 52 months N/A Avg $ APR 33.2% 29.1% 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(9) Positive social impact $3,562 $3,490 $3,141 Approx. 1.1M $2,000 savings $2,439 Credit histories $2,495 established(10) $1,310 $1,027 Certified by the US Treasury $478 Department Online-only Online Single-Pay Auto Pay
Slide 10: Savings product is also a 2024 priority
Savings product is also a 2024 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 $10.5B+ of U.S. consumers would that helps members saved for members stru
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: Multi-channel loan fulfillment and servicing
Multi-channel loan fulfillment and servicing 49% of 2023 applicants used more than one channel to apply; 74% utilized Mobile / Digital channel for at least part of their applications, even if they initiated in Retail or with a Contact Center Loan Fulfillment Channels(12) Payment Channels Mix Channel
Slide 13: Strategic Priorities
Strategic Priorities Oportun
Slide 14: 2024 Strategic Priorities
2024 Strategic Priorities • 1-29 day delinquencies now running well below 2023, rolling into improved 30+ Improving Credit • Maintaining tight credit posture initiated in July 2022; tightened further in 4Q23 Outcomes • Launched V12 risk model built on performance data from the inflationary environme
Slide 15: Focused on three differentiated core products
Focused on three differentiated core products: Personal Loans, Secured Personal Loans and Savings Unsecured Personal Secured Personal Streamlined Product Savings Loans Loans Suite • Primary focus and largest • Significant state-by-state • #1 savings app of 2023 • Credit card strategic review compone
Slide 16: Post-July 2022 credit tightening vintages outperforming prior vintages
Post-July 2022 credit tightening quarterly vintages are outperforming prior vintages in net lifetime loss rate by month on book ~400bps lower front book losses 12+ months post- disbursement 3Q22 vintage only includes August and September 2022. 16
Slide 17: 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* 40% of 1Q24 gross charge- offs 61% 21% 16% 3% YE22 YE23 1Q24 YE24 Expected 17 *Excludes credit cards.
Slide 18: Environmental, Social & Governance (ESG) Impact
Environmental, Social & Governance (ESG) Impact Less Expensive Credit(11) Employee Diversity(15) Interest and Fees Saved(11) 7x less on avg vs. lending alternatives 83% in the U.S. identify as members $2.4B+ for people with little or no credit history of an underrepresented group; saved cumulatively
Slide 19: 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 Walmart Walmart
Slide 20: Financial Overview
Financial Overview Oportun
Slide 21: 1Q24 Earnings Overview
1Q24 Earnings Overview Strong performance vs. expectations leads to improved full year 2024 outlook Resilient total revenue of $250M under tight credit posture $12M above top-end of guidance range Quarterly operating expense of $110M, down 25% Y/Y 1,000+ bps Y/Y improvement in Adjusted Operating Eff
Slide 22: Significantly more efficient than 2019
Significantly more efficient than 2019 OpEx to Average Managed Principal Balance (%) Adjusted OpEx to Average Managed Principal Balance (%) 332bps 389bps 17.3% 16.9% 14.0% 13.0% 1Q19 1Q24 1Q19 1Q24 OpEx Ratio Adjusted OpEx Ratio See Appendix for Key Definitions and a reconciliation to the most compa
Slide 23: First quarter 2024 capital and liquidity
First quarter 2024 capital and liquidity Strong 1Q24 $86M operating cash flow increased 12% Y/Y; additional $150M whole loan sale agreement executed in May Sources of Liquidity Net Change in Cash and Primary Drivers Operating Cash Flow Trend Fixed Rate Debt (%) ($M) ($M) ($M) $1,062 $107 $106 $103 1
Slide 24: Higher portfolio yield supports resilient top-line amidst credit tightening
Higher portfolio yield supports resilient top-line amidst credit tightening Aggregate Originations ($M) Total Revenue ($M) (6)% $2,923 (17)% ´24E / ´23 $1,057 (3)% $953 $985 - $1,010 $2,295 $627 $1,813 $584 $1,348 $408 $250 $338 $260 2020 2021 2022 2023 1Q23 1Q24 2020 2021 2022 2023 2024E 1Q23 1Q24
Slide 25: Expect $66M improvement in 2024 Adjusted EBITDA
Expect $66M improvement in 2024 Adjusted EBITDA, ~350% year-over- year growth Adjusted EBITDA($M) +$66M ´24E vs ´23 $80 - $90 $19 $1.9 $17 $(20) 2022 2023 2024E 1Q23 1Q24 Adjusted EBITDA Margin (%) 1.7% 1.8% 8.5% (7.8)% 0.8% Presented under revised calculation introduced in 2024. See Appendix for de
Slide 26: Expected return to full-year Adjusted Net Income profitability during 2024
Expected return to full-year Adjusted Net Income profitability during 2024 Adjusted Net Income (Loss) ($M) $3.6 $(57.7) $(83) $(71) 2022 2023 1Q23 1Q24 Adjusted ROE (%) (14.4)% (15.0)% (46.6)% 3.7% Presented under revised calculation introduced in 2024. See Appendix for definitions and / or a reconc
Slide 27: Second quarter and Full Year 2024 guidance
Second quarter and Full Year 2024 guidance 2Q 2024E FY 2024E Total Revenue $245 - $250M $985 - $1,010M Annualized Net Charge-off Rate (%) 12.4% +/- 15 bps 11.9% +/- 50 bps Adjusted EBITDA* $14 - $17M $80 - $90M * See Appendix for Key Definitions and the revised Adjusted profitability metrics and for
Slide 28: Dollar net charge-offs projected to decline in 2024
Although dollar net charge-offs are projected to decline by approximately 9% in 2024, lower average daily principal balances are resulting in higher annualized net charge-off rates Year-Over-Year (7%) (10%) (9%) $NCO Decline Note: Analysis assumes charge-offs in dollars is the same within each of th
Slide 29: Attractive unit economic model
Attractive unit economic model Business structured to deliver strong ROEs in a normalized environment Illustrative Unit Economics - % of Owned Principal Balance Corporate Level Profitability = = = = = A B Total C Net D Risk E F 18 APR Non-Interest Revenue Cost of Interest Net Charge Adjusted Operati
Slide 30: Appendix
Appendix
Slide 31: 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 • Asset-backed Securitization (“ABS”) is
Slide 32: 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 33: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Change 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Aggregate Originations (Millions) $ 338.2 $ 437.3 $ 482.7 $ 485.1 $ 408.0 (17.1)% Portfolio Yield 32.5 % 32.7 % 32.5 % 32.2 % 31.4 % 30+ Day Delinquency Rate (%) 5.2 % 5.9 % 5.5 % 5.3 % 5.5 % Annualized Net Charge-Of
Slide 34: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Change ($ Millions, except per share data. Shares in Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Interest income $ 230.6 $ 242.2 $ 243.3 $ 240.5 $ 237.6 (3.0) % Non-interest income 19.9 20.5 25.0 26.1 21.9 (9.1) % Total revenue $ 250.5 $ 262.6 $ 268.2
Slide 35: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Cash and cash equivalents $ 69.2 $ 91.2 $ 81.9 $ 73.4 $ 74.1 (6.6) % Restricted cash 127.4 114.8 117.8 129.0 127.8 (0.4) % Total cash $ 196.6 $ 206.0 $ 199.6 $ 202.3 $ 201.9 (2.7)% Loans receivable at
Slide 36: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Change ($ Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Net income (loss) $ (26.4) $ (41.8) $ (21.1) $ (14.9) $ (102.1) 74.1 % Adjustments: Income tax expense (benefit) (4.0) (15.5) (16.2) (2.6) (39.4) 89.8 % Interest on corporate financing(1)(2) 13.9 14.6 15.0
Slide 37: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Change ($ Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Net income (loss) $ (26.4) $ (41.8) $ (21.1) $ (14.9) $ (102.1) 74.1 % Adjustments: Income tax expense (benefit) (4.0) (15.5) (16.2) (2.6) (39.4) 89.8 % Stock-based compensation expense 4.0 4.8 4.3 4.4
Slide 38: Adjusted operating efficiency and adjusted operating expense reconciliation
Adjusted operating efficiency and adjusted operating expense reconciliation Quarter Ended Change ($ Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Operating Efficiency 43.8 % 49.3 % 45.7 % 51.1 % 56.4 % Total Revenue $ 250.5 $ 262.6 $ 268.2 $ 266.6 $ 259.5 (3.5)% Total operating expense $ 109.6 $ 129.4 $ 12
Slide 39: 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) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Net income (loss) $ (26.4) $ (41.8) $ (21.1) $ (14.9) $ (102.1) 74.1 % Net income (loss) attributable to common stockholders $ (26.4) $ (41.8)
Slide 40: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Quarter Ended Change ($ Millions, except per share data. Shares in Millions) 1Q24 4Q23 3Q23 2Q23 1Q23 Y/Y Diluted earnings (loss) per share $ (0.68) $ (1.09) $ (0.55) $ (0.41) $ (3.00) 77.3 % Adjusted Net Income $ 3.6 $ (8.2) $ (11.8) $ 6.2 $ (57.7) NM Basi
Slide 41: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 2Q 2024 FY 2024 ($ Millions) Low High Low High Net (loss)* $ (13.6) * $ (11.3) * $ (36.6) * $ (28.2) * Adjustments: Income tax expense (benefit) (3.8) (3.1) (9.8) (7.5) Interest on corporate financing 13.5 13.5 51.4 51.4 Depreciation and amortization 13
Slide 42: Net change in fair value
Quarter Ended Change Net change $ Millions 1Q24 4Q23 1Q23 4Q22 Q/Q Y/Y in fair value Loan Portfolio Drivers Discount rate 9.1 % 10.1 % 11.1 % 11.5 % (1.0)% (2.0)% Remaining cumulative charge-offs as a % of principal balance 11.9 % 12.1 % 11.7 % 10.4 % (0.2)% 0.2 % Average life in years 1.03 1.01 0.9
Slide 43: Fair value estimate methodology
Fair value Quarter Ended Change estimate 1Q24 4Q23 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y methodology Weighted average portfolio yield over the remaining life of the loans 28.87 % 29.10 % 29.58 % 29.85 % 29.61 % 29.34 % 29.73 % (0.74) % Less: Servicing fee (5.00) % (5.00) % (5.00) % (5.00) % (5.00) % (5.00) %
Slide 44: 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 45: Endnotes
Endnotes 1. FINRA Investor Education Foundation Study, February 2021 2. Financial Health Network (FHN): “Financial Health Pulse™ 2022 U.S. Trends Report” 3. Gallup article published on May 18, 2023 - https://news.gallup.com/poll/506012/americans-remain-discouraged-personal-finances.aspx 4. GoBanking
Slide 46: Investor Contact
Investor Contact Dorian Hare 650-590-4323 ir@oportun.com