Oportun Financial Corporation · NASDAQ:OPRT
Oportun Financial — Investor Presentation (March 2024)
46 slides from Oportun Financial's investor presentation, March 2024
Slide 1: Investor Presentation | March 2024
Investor Presentation | March 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 2.2M $2.4B $10.2B 2023 Y/Y total Members using our Saved in interest and Helped saved for revenue growth of intelligent borrowing, fees by members members since 2015, ~11% savings and using Oportun at an average of budgeting products personal loans $1,800 per year Growth Me
Slide 5: Investment highlights
Investment highlights A.I.-Enabled Digital-First Addressing two Highly Mission- Platform fundamentally Attractive Long-Term Driven Models built on challenging problems Growth Focus 17 years of proprietary Helping provide financial Growth driven by Product design customer insights health and resilien
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 $3,532(7) $6,254(7) $992(8) Avg Term 41 months 52 months N/A Avg $ APR 32.9% 28.9% 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 Approx. 1.1M $2,000 savings Credit histories established(10) Certified by the US Treasury Department as a Community Development Financial Institution (CDFI) since 2009 Expense multiples Competi
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 $10.2B+ of U.S. consumers would that helps members saved for members stru
Slide 11: Oportun ranks amongst leading brands in 2023 J.D. Power Consumer Finance Satisfaction Survey
Oportun ranks amongst leading brands in 2023 J.D. Power Consumer Finance Satisfaction Survey Overall Customer Satisfaction Index Ranking • Highest ranking amongst lenders focused on hardworking individuals outside of the financial mainstream • Third highest score amongst fintechs 11
Slide 12: Strategic Priorities
Strategic Priorities Oportun
Slide 13: 2024 Strategic Priorities
2024 Strategic Priorities • Maintaining tight credit posture initiated in July 2022; tightened further in 4Q23 Improving Credit • Launched V12 risk model built on performance indicators and factors learned during Outcomes inflationary environment • February 2024 month-end 1-29 day delinquencies runn
Slide 14: Focused on three differentiated core products
Focused on three differentiated core products: Personal Loans, Secured Personal Loans and Savings Unsecured Personal Loans Secured Personal Loans Savings Streamlined Product Suite •Primary focus and largest •Expansion opportunity of •#1 savings app of 2023 •Credit card strategic review component of
Slide 15: Post-July 2022 credit tightening vintages outperforming in net lifetime loss
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. 15
Slide 16: 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* 53% of 4Q23 gross charge-offs Pre-July 2022 Credit Tightening 16 *Excludes credit cards.
Slide 17: Environmental, Social & Governance (ESG) Impact
Environmental, Social & Governance (ESG) Impact Less Expensive Credit(12) Employee Diversity(14) Interest and Fees Saved(12) 7x less on avg vs. lending alternatives for 83% in the U.S. identify as members of $2.4B+ people with little or no credit history (16x an underrepresented group; saved cumulat
Slide 18: 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 Retall Walmart >! Walm
Slide 19: Financial Overview
Financial Overview Oportun
Slide 20: 4Q23 Earnings Overview
4Q23 Earnings Overview Solid 4Q23 execution, markedly improved profitability anticipated for 2024 Total revenue of $263M, bringing FY23 to record $1.1B, up 11% Y/Y Quarterly operating expense of $129M including $7M of severance, down 15% Y/Y $101M adjusted operating expense is lowest in 2.5 years; n
Slide 21: 4Q23 OpEx to average managed principal balance significantly more efficient than 2019
4Q23 OpEx to average managed principal balance significantly more efficient than 2019 Opex to Average Managed Principal Balance (%) Adjusted Opex to Average Managed Principal Balance (%) See Appendix for Key Definitions and a reconciliation to the most comparable GAAP measure. 21
Slide 22: Fourth quarter 2023 capital and liquidity
Fourth quarter 2023 capital and liquidity $200 million February asset backed securitization priced 160 bps lower than October ABS; recently amended senior secured term loan to obtain asset coverage ratio(16) covenant flexibility Sources of Liquidity Fixed Rate Debt (%) Net Change in Cash and Primary
Slide 23: Revised adjusted profitability metrics
Revised adjusted profitability metrics Revisions starting with 2024 reporting to better align with how management evaluates operational performance Revised Adjusted Net Income • Excludes fair value mark-to-market adjustments on Adjusted Net Income Revised Calculation ($ Millions) asset-backed notes
Slide 24: Revenue grew 11% in FY23 despite lower originations on tightened credit
Revenue grew 11% in FY23 despite lower originations on tightened credit Aggregate Originations ($M) Total Revenue ($M) (7)% —% (28)% ´24E / ´23 $975 - $1,000 See Appendix for definitions and / or a reconciliation to the most comparable GAAP measure. 24
Slide 25: Expect $40-$50M in 2024 Adjusted EBITDA improvement
Expect $40-$50M in 2024 Adjusted EBITDA improvement in 2024 Adjusted EBITDA($M) +$46M ´24E vs ´23 $60 - $70 Adjusted EBITDA Margin (%)* 1.7% 1.8% 6.4% (9.3)% 3.8% Presented under revised calculation introduced in 2024. See Appendix for definitions and / or a reconciliation to the most comparable GAA
Slide 26: Markedly improved profitability anticipated for 2024
Markedly improved profitability anticipated for 2024 on further cost reductions and lower credit losses Adjusted Net Income (Loss) ($M) Adjusted ROE (%)* (14.4)% (15.0)% (11.2)% (7.7)% Presented under revised calculation introduced in 2024. See Appendix for definitions and / or a reconciliation to t
Slide 27: 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 APR Non-Interest Revenue Cost of Interest Net Charge Adjusted Operating
Slide 28: Appendix
ortun 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 Year Ended December 31 Change Change 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Members 2,224,302 2,098,172 2,005,008 1,911,592 1,877,260 18.5 % 2,224,302 1,877,260 18.5 % Products 2,387,745 2,259,464 2,155,240 2,059,007 2,006,245 19.0 % 2,387,745 2,00
Slide 32: Condensed consolidated income statement
Condensed consolidated income statement Quarter Ended Year Ended December 31 Change Change ($ Millions, except per share data. Shares in Millions) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Interest income $ 242.2 $ 243.3 $ 240.5 $ 237.6 $ 244.1 (0.8) % $ 963.5 $ 876.1 10.0 % Non-interest income 20.
Slide 33: Condensed consolidated balance sheet
Condensed consolidated balance sheet Quarter Ended Change ($ Millions) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y Cash and cash equivalents $ 91.2 $ 81.9 $ 73.4 $ 74.1 $ 98.8 (7.7) % 114.8 117.8 Restricted cash 129.0 127.8 105.0 9.4 % Total cash $ 206.0 $ 199.6 $ 202.3 $ 201.9 $ 203.8 1.1 % Loans receivable at fa
Slide 34: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Quarter Ended Year Ended December 31, Change Change ($ Millions) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (41.8) $ (21.1) $ (14.9) $ (102.1) $ (8.4) (396.5)% $(180.0) $(77.7) (131.5)% Adjustments: Income tax expense (benefit) (15.5) (16.2) (2.6) (
Slide 35: Adjusted EBITDA reconciliation compared to revised calculation
Adjusted EBITDA reconciliation compared to revised calculation Quarter Ended Year Ended December 31, 4Q23 4Q22 2023 2022 ($ Millions) Reported Revised Reported Revised Reported Revised Reported Revised Net income (loss) $ (41.8) $ (41.8) $ (8.4) $ (8.4) $ (180.0) $ (180.0) $ (77.7) $ (77.7) Adjustme
Slide 36: Adjusted net income reconciliation
Adjusted net income reconciliation Quarter Ended Year Ended December 31, Change Change ($ Millions) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Net income (loss) $ (41.8) $ (21.1) $ (14.9) $ (102.1) $ (8.4) (396.5)% $ (180.0) $ (77.7) (131.5)% Adjustments: Income tax expense (benefit) (15.5) (16.2) (
Slide 37: Adjusted net income reconciliation compared to revised calculation
Adjusted net income reconciliation compared to revised calculation Quarter Ended Year Ended December 31, 4Q23 4Q22 2023 2022 ($ Millions) Reported Revised Reported Revised Reported Revised Reported Revised Net income (loss) $ (41.8) $ (41.8) $ (8.4) $ (8.4) $ (180.0) (180.0) $ (77.7) $ (77.7) Adjust
Slide 38: Adjusted operating efficiency and adjusted operating expense reconciliation
Adjusted operating efficiency and adjusted operating expense reconciliation Quarter Ended Year Ended December 31 Change Change ($ Millions) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Operating Efficiency 49.3 % 45.7 % 51.1 % 56.4 % 57.8 % 50.6 % 75.2 % Total Revenue $ 262.6 $ 268.2 $ 266.6 $ 259.5 $
Slide 39: 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) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y $ Net income (loss) $ (41.8) (21.1 $ (14.9) $ (102.1) $ (8.4) (396.5) % $ (180.0) $ (77.7) (131.5)
Slide 40: 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) 4Q23 3Q23 2Q23 1Q23 4Q22 Y/Y 2023 2022 Y/Y Diluted earnings (loss) per share $ (1.09) $ (0.55) $ (0.41) $ (3.00) $ (0.25) (336.0) % $ (4.88) $ (2.37)
Slide 41: Forward looking adjusted EBITDA reconciliation
Forward looking adjusted EBITDA reconciliation 1Q 2024 FY 2024 ($ Millions) Low High Low High Net (loss)* $ (35.8) * $ (34.2) * $ (54.2) * $ (46.3) * Adjustments: (14.7) (14.3) (12.9) (10.8) Income tax expense (benefit) Interest on corporate financing 13.4 13.4 48.7 48.7 Depreciation and amortizatio
Slide 42: Net change in fair value
Net change $ Millions 4Q23 Quarter Ended 3Q23 4Q22 3Q22 Change Q/Q Y/Y in fair value Loan Portfolio Drivers Discount rate 10.1% 11.2% 11.5% 10.2 % (1.0)% (1.4)% Remaining cumulative charge-offs as a % of principal balance 12.1% 11.9% 10.4 % 11.7% 0.2 % 1.7% Average life in years 1.01 1.00 1.00 0.92
Slide 43: Fair value estimate methodology
Fair value Quarter Ended Change estimate 4Q23 3Q23 2Q23 1Q23 4Q22 3Q22 2Q22 Y/Y methodology Weighted average portfolio yield over the remaining life of the loans 29.10 % 29.58 % 29.85 % 29.61 % 29.34 % 29.73 % 30.14 % (0.24) % 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Dollar Weighted Average Original Term for Vintage 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 (Months) Net Lifetime Loan Losse
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
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