Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Investor Presentation (September 2023)
48 slides from Oportun Financial's investor presentation, September 2023
Slide 1: Smart Borrowing, Savings, and Budgeting for hardworking people
Smart Borrowing, Savings, and Budgeting for hardworking people Investor Presentation | September 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 $1.0B 2.0M 2.2M 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 10-11% and budgeting products Scale Members
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, 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 planning2 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 overdrafted
Slide 8: Comprehensive set of financial products
Comprehensive set of financial products A profitable lending platform combined with savings and investing products #1 savings app of 2023 according to Bankrate 8 best money savings apps of 2023 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 $4,1016 $7,4866 $8767 Avg Term 40 months 51 months N/A Avg $ APR 32.3% 28.3% 29.8% Use Case Simple-to-understand, affordable, Personal installment loan product An “eve
Slide 10: We deliver significant savings compared to alternatives
We deliver significant savings compared to alternatives Cost of borrowing $1,5008 Positive social impact $3,562 $3,490 $3,141 Approx. 1.1M $1,900 savings $2,439 $2,495 Credit histories established9 $1,310 $1,027 Certified by the US Treasury $500 Department as a Community Development Online-only 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 $9.6B+ 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: Building long-term, highly engaged relationships
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 550,000 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 • 2Q23 Operating Expenses of $136M, lowest quarterly figure since 2021 • 43.4% Adjusted Operating Efficiency for 2Q23 sets fourth consecutive quarterly Cost Reductions post-2019 IPO record, 1,860 bps Y/Y improvement • On track for ~$125M OpEx in 4Q23, driven by 28% cut
Slide 16: 2Q23 OpEx to average daily principal balance more efficient than 2019
2Q23 OpEx to average daily principal balance more efficient than 2019 OpEx to Average Daily Principal Balance (%) Adjusted OpEx to Average Daily Principal Balance (%) 21.5% 20.9% 18.2% 15.5% 2Q19 2Q23 2Q19 2Q23 Opex Ratio Adjusted Opex Ratio See Appendix for Key Definitions and a reconciliation to t
Slide 17: Strong risk-adjusted yield drives profitability
Strong risk-adjusted yield drives profitability 31.8% 20.1% (11.7)% 15.1% (5.0)% 11 12 Gross Yield Net Charge-Offs Risk-Adjusted Yield Servicing Fees Unlevered Contribution Yield 17
Slide 18: First Payment Defaults driven down to 2019 pre-pandemic levels
First Payment Defaults driven down to 2019 pre-pandemic levels 3% 2% 1% 0% 28 4 8 1 18 22 5 1 5 /9 15 19 3 29 2 7 13 16 21 27 30 4 10 14 18 24 /1 4/ 1/ 3/ 9/ /2 /2 7/ 8/ 2/ 1/ 5/ 3/ 4/ 8/ / 9/ 2/ 12 6/ 7/ 5/ / 4/ 6/ 11 9/ 10 12 10 11 2019 2022 2023 First Payment Defaults are calculated as the princi
Slide 19: Post-July credit tightening loans performing near to better than 2019 vintages
Post-July credit tightening loans are performing near to better than 2019 pre-pandemic vintages and growing in proportion Net-Charged Off + Quarter-End Back Book Portfolio 30+ Day Delinquency Rates, MoB 3 30+ Day Delinquency Rates, MoB 6 Outstanding ($B)14 13 Q3 Vintage Q4 Vintage Q4 Vintage Q1 Vint
Slide 20: Strategic Priorities
Strategic Priorities Oportun
Slide 21: Strategic priorities: focused on sustainable long-term growth & profitability
Strategic priorities: focused on sustainable long-term growth & profitability ~85% corporate expense allocation ~10% ~5% Fortify Core Business Strengthen Core Build Member Unsecured Personal Develop Product Suite Economics Engagement Platform Loan Product • Improve profitability and • Prioritize uni
Slide 22: Environmental, Social & Governance (ESG) Impact
Environmental, Social & Governance (ESG) Impact Less Expensive Credit15 Employee Diversity17 Interest and Fees Saved15 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 by me
Slide 23: 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 24: Financial Overview
Financial Overview Oportun
Slide 25: Earnings overview
Earnings overview Key takeaways from Oportun's second quarter 2023 results Returned to profitability18 Adjusted Net Income of $2M reflects 11th profitable quarter in the last 12 Credit outlook improving Annualized Net Charge-Off Rate anticipated to decline to 11.7% +/- 15 bps in 3Q 14% Y/Y decline i
Slide 26: Revenue growth remains resilient despite tightened originations
Revenue growth remains resilient despite tightened originations Aggregate Originations ($M) Fair Value Pro Forma Total Revenue ($M)* 10% (45)% $1,045 - $1,055 18% ´23E / ´22 $953 $2,923 $2,295 $598 $2,052 $878 $627 $584 $267 $1,348 $485 $226 2019 2020 2021 2022 2Q22 2Q23 2019 2020 2021 2022 2023E 2Q
Slide 27: 2Q marks 11th of last 12 Adjusted Net Income profitable quarters
2Q marks 11th of last 12 Adjusted Net Income profitable quarter; guiding to more 2H23 Adjusted EBITDA than prior 16 quarters combined Adjusted Net Income (Loss) ($M)* Adjusted EBITDA ($M)* +$83M ´23E vs ´22 $74 $70 - $75 $63 $79 $69 $47 $4 $4 $2 $22 $(10) $(4) $(14) 2019 2020 2021 2022 2Q22 2Q23 201
Slide 28: Appendix
Appendix
Slide 29: Key definitions
Key definitions • 30+ Day Delinquency Rate is the unpaid principal balance for our owned loans and credit card receivables that are 30 or more calendar days contractually past due as of the end of the period divided by Owned Principal Balance as of such date • Adjusted EBITDA is a non-GAAP financial
Slide 30: Key definitions (cont'd)
Key definitions (cont’d) • Customer Acquisition Cost (or "CAC") is calculated as sales and marketing expenses, which include the costs associated with various paid marketing channels, including direct mail, digital marketing and brand marketing and the costs associated with our telesales and retail
Slide 31: Key financial & operating metrics
Key financial & operating metrics Quarter Ended Six Months Ended June 30 Change Change 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Members 2,005,008 1,911,592 1,877,260 1,858,335 1,818,588 10.3 % 2,005,008 1,818,588 10.3 % Products 2,155,240 2,059,007 2,006,245 1,981,310 1,928,261 11.8 % 2,155,240 1,
Slide 32: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Six Months Ended June 30 Change Change ($ Millions, except per share data. Shares in Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Interest income $ 240.5 $ 237.6 $ 244.1 $ 232.1 $ 207.7 15.8 % $ 478.1 $ 399.9 19.6 % Non-interest income 26
Slide 33: 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 (1) December 31, 2020 December 31, 2019 ($ 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 34: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y Cash and cash equivalents $ 73.4 $ 74.1 $ 98.8 $ 175.9 $ 66.7 10.0 % Restricted cash 129.0 127.8 105.0 96.4 67.1 92.1 % Total cash $ 202.3 $ 201.9 $ 203.8 $ 272.2 $ 133.9 51.2 % Loans receivable at fa
Slide 35: 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 36: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Six Months Ended June 30, Change Change ($ Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (14.9) $ (102.1) $ (8.4) $ (105.8) $ (9.2) (62.7)% $(117.0) $36.5 NM Adjustments: Income tax expense (benefit) (2.6) (39.4) 0.5 (6.5) (3.5)
Slide 37: Adjusted EBITDA historical full-year reconciliation
Adjusted EBITDA historical full-year reconciliation Year Ended December 31 ($ 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 38: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Six Months Ended June 30, Change Change ($ Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (14.9) $ (102.1) $ (8.4) $ (105.8) $ (9.2) (62.7) % $ (117.0) $ 36.5 NM Adjustments: Income tax expense (benefit) (2.6) (39.4) 0.5 (6.5
Slide 39: 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 40: Adjusted operating efficiency and adjusted operating expense reconciliation
Adjusted operating efficiency and adjusted operating expense reconciliation Quarter Ended Six Months Ended June 30 Change Change ($ Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Operating Efficiency 51.1 % 56.4 % 57.8 % 103.7 % 69.9 % 53.7 % 69.3 % Total Revenue $ 266.6 $ 259.5 $ 261.9 $ 250.
Slide 41: Basic and diluted earnings per share reconciliation
Basic and diluted earnings per share reconciliation Quarter Ended Six Months Ended June 30 Change Change ($ Millions, except per share data. Shares in Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (14.9) $ (102.1) $ (8.4) $ (105.8) $ (9.2) (62.7) % $ (117.0) $ 36.5 NM Net
Slide 42: Adjusted earnings per share reconciliation
Adjusted earnings per share reconciliation Quarter Ended Six Months Ended June 30 Change Change ($ Millions, except per share data. Shares in Millions) 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y 2023 2022 Y/Y Diluted earnings (loss) per share $ (0.41) $ (3.00) $ (0.25) $ (3.21) $ (0.28) (46.4) % $ (3.31) $ 1.10 N
Slide 43: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 3Q23 FY 2023 ($ Millions) Low High Low High Net income (loss)* $ 7.8 * $ 11.4 * $ (28.9) * $ (25.2) * Adjustments: Income tax expense (benefit) 2.8 4.2 (9.4) (8.1) Interest on corporate financing 10.9 10.9 37.7 37.7 Depreciation and amortization 10.7 10
Slide 44: Net change in fair value
Quarter Ended Change Net change $ Millions 2Q23 1Q23 2Q22 1Q22 Q/Q Y/Y in fair value Loan Portfolio Drivers Discount rate 11.1 % 11.1 % 9.0 % 6.8 % —% 2.1 % Remaining cumulative charge-offs as a % of principal balance 11.4 % 11.7 % 11.2 % 10.4 % (0.4)% 0.1 % Average life in years 0.96 0.96 0.90 0.85
Slide 45: Fair value estimate methodology
Fair value Quarter Ended Change estimate 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 Y/Y methodology Weighted average portfolio yield over the remaining life of the loans 30.02 % 29.78 % 29.50 % 29.90 % 30.27 % 30.15 % 30.14 % (0.25) % Less: Servicing fee (5.00) % (5.00) % (5.00) % (5.00) % (5.00) % (5.00) %
Slide 46: 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 47: 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 48: Investor Contact
Investor Contact Dorian Hare 650-590-4323 ir@oportun.com
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