Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Q1 2024 Earnings Presentation
33 slides from Oportun Financial's earnings presentation, May 9, 2024
Slide 1: 1Q 2024 Earnings Presentation
1Q 2024 Earnings Presentation May 9, 2024 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: 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 4: 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 5: Post-July 2022 credit tightening vintages outperforming prior vintages in net lifetime loss
Post-July 2022 credit tightening quarterly vintages are outperforming prior vintages in net lifetime loss rate by month on book(1) ~400bps lower front book losses 12+ months post- disbursement (1) 3Q22 vintage only includes August and September 2022. 5
Slide 6: 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 (1) 40% of 1Q24 gross charge-offs 61% 21% 16% 3% YE22 YE23 1Q24 YE24 Expected Pre-July 2022 Credit Tightening (1) Excludes credit cards. 6
Slide 7: Significantly more efficient than 2019
Significantly more efficient than 2019 OpEx to Average Managed Principal Balance (%) Adjusted OpEx to Average Managed Principal Balance (%)(1) 332bps 389bps 17.3% 16.9% 14.0% 13.0% 1Q19 1Q24 1Q19 1Q24 OpEx Ratio Adjusted OpEx Ratio (1) See Appendix for Key Definitions and non-GAAP reconciliation to
Slide 8: Prudently expanding Secured Personal Loans product
Prudently expanding Secured Personal Loans product, featuring better unit economics than Unsecured Higher Total Revenue per unit Lower Net Charge-Offs (FY23) (FY23) 50%+ ~350bps 8
Slide 9: First quarter performance vs. guidance
First quarter performance vs. guidance 1Q 2024 Guidance 1Q 2024 Actual Total Revenue $233 - $238 M $250 M Annualized Net Charge-off 12.1% +/- 15 bps 12.0% Rate (%) Adjusted EBITDA (1) $(14) - $(12) M $1.9 M (1) See Appendix for Key Definitions and non-GAAP reconciliation to the most comparable GAAP
Slide 10: First quarter 2024 highlights
First quarter 2024 highlights Financial Highlights Adjusted Operating Efficiency(1) (1,054) bps Total Revenue GAAP Net Loss $250M $26M 51.2% (1) (1) 40.9% 40.6% Adjusted EBITDA Adjusted Net Income $1.9M $3.6M GAAP Diluted EPS Adjusted EPS(1) 1Q23 4Q23 1Q24 $(0.68) $0.09 Total revenue $260M $263M $25
Slide 11: Credit performance
Credit performance Sharp 60+ bps sequential, 20+ bps year-over-year reduction in 30+ Day Delinquency Rate a positive indicator towards reducing Annualized Net Charge-off Rate Annualized Net Charge-off Rate (%)(1) 30+ Day Delinquency Rate (%)(1) 12.1% 12.3% 12.0% 5.9% 5.5% 5.2% 1Q23 4Q23 1Q24 1Q23 4Q
Slide 12: 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) $(9.5) $1,062 $107 $106
Slide 13: 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 (1) $14 - $17M $80 - $90M (1) See Appendix for Key Definitions and the revised Adjusted profitability metrics an
Slide 14: Dollar net charge-offs projected to decline about 9% 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 15: Appendix
Appendix
Slide 16: 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 17: 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 18: Reduced OpEx and credit losses support Adjusted Net Income and EBITDA improvement
Reduced OpEx and credit losses support $61M Y/Y improvement Adjusted Net Income, $22M improvement in Adjusted EBITDA during 1Q24 Adjusted Net Income (Loss) ($M)(1) Adjusted EBITDA ($M)(1) $61M $22M $3.6 $9.9 $1.9 $(8.2) $(20) $(58) 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 Adjusted ROE (%)(1) Adjusted EBITDA Ma
Slide 19: Owned Principal Balance and Aggregate Originations decreased year-over-year
Owned Principal Balance and Aggregate Originations decreased year- over-year given tightened credit underwriting Owned Principal Balance at EOP ($B) Aggregate Originations ($M) (8)% (17)% $3.0 $2.9 $2.8 $408 $437 $338 1Q23 4Q23 1Q24 1Q23 4Q23 1Q24 19
Slide 20: 1Q Total Revenue resilient, down (3)% Y/Y
1Q Total Revenue Total Revenue ($M) resilient, down (3)% (3)% Y/Y $260 $263 $250 1Q24 Highlights Total Revenue: $250M, down $9M Y/Y; 7% lower 1Q23 4Q23 1Q24 average daily principal balance on credit tightening partially offset by 113 bps higher portfolio Net Revenue ($M) yield $74M Net Revenue: $79M
Slide 21: 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 1 APR Non-Interest Revenue Cost of Interest Net Charge Adjusted Operatin
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: Fair value estimate methodology
Fair value Quarter Ended estimate Change 1Q24 4Q23 3Q23 2Q23 1Q23 4Q22 3Q22 Y/Y methodology Weighted average portfolio yield over the 28.87 % 29.10 % 29.58 % 29.85 % 29.61 % 29.34 % 29.73 % (0.74) % remaining life of the loans Loans receivable at fair Less: Servicing fee (5.00) % (5.00) % (5.00) % (
Slide 33: 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