OPRT - Earnings call transcript Q1 2020 | Oportun Financial Corporation

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Operator

Good afternoon, and welcome to Oportun Financial Corporation's First Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the speakers remarks there will be a question-and-answer session. Today's call is being recorded.

For opening remarks and introductions, I'd like to turn the call over to Nils Erdmann, Vice President of Investor Relations. Mr. begin. may you Erdmann,

Nils Erdmann

afternoon, good everyone. and Thanks,

Administrative to Joining results Chief first Chief XXXX Oportun's Raul me Financial Vazquez, and Coblentz, today are Jonathan Chief quarter and discuss Executive Officer. Officer Officer;

me forward-looking Before we remarks today statements. contemplated differ include will or you may some statements. results from of made Actual remind forward-looking materially get the that implied let started, those by these

or earnings of these set based events. detailed today, discussion this the release. today's results forth as obligation no future differ more that on cause we update risk and statements A could on forward-looking these a are to materially in make information of that statements press Any of factors result undertake to assumptions we as are call new

both section in A non-GAAP reconciliation earnings believe non-GAAP may today's measures, financial we included we of as quarter first information. Also are on is will XXXX our our appendix call, useful measures website GAAP of the all earnings and available release, provide first press at as GAAP present on which Investor to financial which well quarter presentation, Relations XXXX the of investor.oportun.com. supplement, the

call the of version an webcast being be available Relations will after this and our addition, call In Investor is the on archived portion website.

now With to Raul. call will the that, I over turn

Raul Vazquez

and financial crisis. are actions the healthy us to the to Thank response operate hope present you, all some Nils. brief I'll And I that and this near-term good review discuss of appreciate for for as with your an and April, a we join friends our your well reads afternoon, the time will quarter We well pandemic results, decisive our taking of a everyone. period. you, start families safe. on followed credit focus as as as Jonathan weeks, to three our recent and early then preliminary in areas our taken update few financial May. performance by first will of throughout successfully we've

Now focus. capital our customers, three near-term customers. to what through of and let three, liquidity. our me and start doing areas our with serving serve credit are One, I'll take you two we

our The is top are for the state precautions with and employees in the safety Disease health priority and from guidelines and accordance and necessary all Control Centers of our authorities. taking local and we customers

a Department As services of provider, part by of critical sector financial the Oportun Security. essential deemed Homeland is infrastructure an

retail solution. are phone our through we and our network, continuing So to through contact our online omni-channel serve locations, the mobile end-to-end in our person customers centers our over at through

company's by to able open who in April XXX that order, and XXX the work remain schedule Mexico were As do full of a customers so. retail state to exception of can locations of and wants everyone stores XXth, serve the closed with New our is

than enables XX volumes. levels average a operation of omni-channel center our call also our significantly all of time remain meet have call Our to over service to our directly contact a phone by less speaking apply loan which contacts seconds, technology, answer in centers representatives. to continued for with increased contact centers the customers our despite to to an one Thanks

customer our through cross-training capacities We proactively service increased existing of and new personnel. hires and collections

work a investments also remotely of allow contact made have that staff center they significant portion technology our We in to. to have if

working have much business. a the have proud of employees how a come we've incredibly as accomplished retail who our our customers I help together to employees Oportun’s to center during how been and last eight throughout and all contact especially grateful am weeks this tirelessly am I as of pandemic. team

and tighten rapidly to into able our criteria credit, investments, Moving technology our move underwriting production. of onto to because changes were deploy we quickly

changing regions. weighting loan of employment regional we and dynamics reduce tier have reflect which us For by those can the and The now scoring in adjustments and underwriting our and factors in example, industry the to credit factors industries we previously make adaptability platform increased our enabled at scorecard to used these outcomes. decisioning sizes speed and the better and of manage credit

to data. adjustments new such based continue We on make

pandemic of recency increasing the impact for anticipation unemployment verification employment income. more of also proof In economic implemented of we and and the the stringent increased rate, requirements

meet Additionally, to collections is stringent criteria to credit we our net implemented servicing and we income to customers those our have and and continue to tighter situation. dynamic The of underwriting actions navigate this have employment implemented lend strategy our part we pricing, incremental changes that capabilities. verified effect who as of more

credit overall reduced to demand in recent lessening along weeks Our in with originations. contributed applications in tightening, an has

In themselves of to availing and activity payments, are continue strong we see our payment customers terms of capabilities. omni-channel customer

month XX% payments our XXth, all the debit via making of locations XX% ended April customers ACH For Oportun’s of retail and over customers paying or outside were of were card. over

Now managed this difficult let how me during about talk time. credit we've performance

underwriting back customers verification the we our feet. days allow and time have XX their get hardship which on to for offering been emergency payments deferrals, to give them skip to them we've implemented, addition changes to In

emergency the X.X% unemployment week XXth. at continue April, significantly decrease time saw rise. of of hardship deferrals rate rate have as to this as We that peak to XX.X% last seen we And the since May

get to reopens able to improve to and back expect work. continue of as economy this our the customers more to are We trend

deferral see the of are over XX% deferrals end to we those made a XX April with due hardship first payment emergency of their fact, set In have come of period customers the a payment. and in day starting to

page we early stage To track which impact disclosed the of the deck. closely pandemic, the also we on earnings XX of monitor delinquencies,

decreased have subsequently March that delinquencies eight as increased of As day from see to to you mid-May. from April XX slide and can

offer payment we grace before leads is customers to that days temporarily know that Mother's up of late mind we lower in keep XX and assessed However, to periods rates. fee a Day

to delinquencies decreasing and seen For encouraging day XX XX we've steadily a trend.

April March XXth, period and respectively. and May XX were rates ending day XX, for delinquency XXth X% X.X%, Our plus the X.X%

quarter, was than first previously the rate impact credit projection, better our pandemic. net the performance the X.X% which our to for charge demonstrating prior of stated was strong Our annualized off

for rate April to increased off charge net annualized X.X%. Our

term area of The is us liquidity. capital and final for near focus

on our have market terms In more to our of runway liquidity the securitization well-established months to liquidity due position based and diversified than XX scenarios, stress test accessing program. we of without continue funding

We possible. the continued as our intend many to prudently manage of ensure our to to our position coming conserving our months, as liquidity over position customers cash service

our of As cash, had loan million decreased to as of April to the portfolio timing of $XXX was line of as the XXth March, million end our repayment of down. which of warehouse paid the $XXX due we

of from the in which quarter cash operations business bolstered liquidity. first our our million Additionally, $XX generated

strong value $XXX a and have sheet leverage. adjusted We in balance million with tangible low book

importance as and our well payments to strength Given the avoid of any sheet it revenue and taking desire layoffs. and of not liquidity locations position, originating retail our balance is and off loans, employees we our as the laid have

Now near-term on our that I've updated focus you areas. three

current would plans strategy created the Let optimizing how our strategic our we drivers sustainable as for areas. me for The current address growth. current smart have environment. to accelerate strategic has in pandemic certain the us I of adapted opportunities characterize our to backdrop

So provide update. let a me brief

from the pandemic the efforts growth of liquidity. focus start capital shifted and the towards have our conservation of Since of

impacting which in reduction a applications originations. seen have also loan our is We

of reduced has increase given that efforts, the lessened decline customer this home is of spending our consumer sudden stay we due marketing to volume in the demand of and and a some While well, as pullback application believe redirection in reflection at unemployment the orders.

In we on the put our hold. temporarily retail light reduction footprint in of demand, of the expansion

demand return will we see are to as that We optimistic reopen. economy begins the

locations while While mobile solution our around orders option the one are stay our the even process via of our more at complete is their even country, mobile home retail valuable have mobile customers of enables option entire customers is in our an navigate effect in the the visiting customers helping accessible solution device. believe online and environment. lending current our particularly it to We end-to-end

crisis the demonstrated to the unfold, the provide features, We end-to-end began solution As servicing. processes. for expedite use to omni-channel ability and additional our simplify to to payment our and mobile origination network enhanced we

our center, to to chats our We inquiries. provide with to to agents to calls customer retail to retail mini enhanced technology customer customers, able was two-way help outreach. SMS and also our locations with become service a of outbound Each make contact leveraged enable our respond infrastructure

our abide distancing maintain and work social agents center have contact Currently, requirements, our contact enable on to center over home by service to working we levels daily technology from we To basis. agents deployed remotely. secure XXX a

scorecard the phasing start our This population. in also returning an fast-growing ability for returning process a risk to manage phase of We were for version credit its designed plan next and represents to especially which in to improvement new weeks. customer risk risk specifically our customers, similar few our was channel. customers, of The mobile in an VXX the in updated latest our version for in our model of

with card. auto an on Now and let update me provide credit you

For as our an pandemic a auto, alternative opportunity before we personal serve more to serve we last of personal saw began loan secured and as an the customers customers larger piloting week. we loans vehicle unsecured that an today. impact the Even the secured offer by loans, loan to to

future. strategies offerings, be revisit personal underwriting success, tighter posture, order to products have direct for even stopped today. refi marketing in to resources, we we more devote auto sufficient our secure this capability the believe our a will these valuable we’ll With loans making In our and but

we more we being response in credit with In the cards, performance down the which very have Visa time December. Oportun credit market launched are data. pleased conditions, of are to gathered slowing For Card results initial for growth the we was until Credit however

economy growth We opportunity open will the remain our optimistic return. that as to for starts

to some to we explore bank already enter licensing products the our be other through new loan to markets on basis. via state on trends two are a To well-prepared means, this, potential including May. first sponsorship a geographic weeks seeing capitalize in personal We nationwide to or initial ways of continue offer positive

Oportun learned, very valuable there while managing been and are overcome, we has the for challenges recession. we through of many that real years applying us the XX lending to lessons are Although for great

leveraging have recedes. the we technology then, this on past our believe leaning is since will again proving even company that and crisis when firmly resilient By built experience this and Oportun finally stronger of I be all

will value by through thoughtfully serving current shareholders. environment protecting long continue while delivering and customers, term for supporting to the our manage prioritizing We and

a line to first who over call Jonathan? you for and Jonathan, then our discussion we'll the open turn your quarter financial through will in-depth results now walk more I'll questions. of the

Jonathan Coblentz

hello and Raul Thanks, everyone.

appreciation today to start Raul’s are me and and ones loved call I healthy you you your echoing joining us and Let safe. those by of this hope on

metrics the all fair more a the consistent performance present we As view to also now value Unless may reconciliations believe will found that the be to in I value for the periods. state forma pro business. addition earnings forma otherwise, our be full trends materials. A based pro a on our can we you will of share GAAP, fair definitions basis of recall year I purposes list of with comparison on you and evaluate results, prior of which underlying in

a We fluid continue to in very operate environment.

a quarter some provide of insights summary from our month discussing with few to while reads So you April first our a also time and I'll May. devote of I'll results, early from the

on environment risk to growth, deliver the our servicing our led adapt we track steps appropriate to the credit changing we but The then were strategy. focus our mid-March, Through preservation. and liquidity shifted reducing took modifications capital origination double-digit to making ensuing to and exposure to to

our attributable reduce from potentially of million In our which year well the reduction applications, March, aggregate customers. first up loan saw late impacted originations to our a by efforts, This as quarter, prior for period. redirection we $XXX.X were a the demand marketing X% in as

revenue the quarter in total $XXX.X now the and $XXX.X value for last originations over first total on driven March, same which total non-interest in growth by strong also of XX% was weeks quarter Despite is million, forma revenue income. our year million as for this up and quarter, the prior XX% the impact pro income GAAP year-over-year. interest basis revenue was a grew two first GAAP to the Fair

portfolio. as year-over-year, we increased Our our million, receivables to interest grow $XXX.X XX% income up

principal managed the grew quarter year prior to over at Our $X.X of XX% reach balance billion. end period

to our We also ago most XX.X% slight year quarter. recent XX.X% saw from quarter portfolio a the decline for in yield the in first a

of sale year $XX.X The income, prior on of XX% sold cash loans Non-interest increased XX.X% in includes the in period. premium volume loan XX.X% growth from offset on by lower which slightly home was our to sale million. versus the gain sale gain program the

to to our in replenish With our sufficient the order our XX% we reduced in ensure we amount of originations reduction sell bonds. that originations, to the XX% core have of revolving we collateral from loans asset-backed

We access continue our sell of we to that all loans originate.

interest in is value revenue in decrease expense core value by quarter revenue impacted was and revenue For the million, $XX.X in net change decrease after X% the in offset the value a our debt. our year-over-year. growth up net net was loans, The of total by first the of our which

was $XX.X debt million interest expense was an our year-over-year. expense of average XX% up increase The Interest year-over-year. driven in XX% balance of daily by higher

debt decreased QX XXXX year same relative of X.X% to in X.X% a cost Our in slightly period ago. to the

relations Net fair increase net presentation that earnings change on or charge change website. in in debt. a net available current We our is QX period in value fair or our the and net fair decrease through loans investor summary in principle XXXX mark-to-market provide offs our of value and value our includes

million the consisted receivable, a in increase million. asset-backed in and related $XX.X XX page $XXX.X mark-to-market current our on to million net $XX.X million a period see loans you'll of decrease mark-to-market $XXX.X quarter presentation, decrease the value first of fair charge-offs our As notes of

Let them. through a our you trading prices our based me marks from service, asset-backed March available by greater marketing in validate the and We from value third-party the with used take our to notes. fair institutional detail, investors notes asset-backed drivers the dealers of fair set starting data value upon and March to compared are

impact March market pandemic. of of December down of of the price asset-backed As XX from result XXX.X% the XXXX, illiquidity the weighted in the significant XXXX, the asset-backed and economic average a notes reflecting our XX.X%, dislocation as was XX at

This in net and bonds in revenue. fair in million of our the significant increase change net in a resulted fair reduction value value $XXX.X

in As market. have of asset-backed dislocation of April our declined reflecting prices XXth XXXX, securities the bonds the continued to XX.X%,

our decrease value XXXX. in in fair two XX.X% of XXst decrease million by for the receivable to XXX.X% as factors. $XXX.X was March loans value The price The fair was from a our loans driven quarter-over-quarter fair by value of in mainly decrease driven

in increase in And XX.XX% the increase XXst to the to X.XX% First, life as XXXX. loan March offs XXst as XXXX the discount XXst December charge XX.XX% from XXXX. at December the XXXX XXst percent X.XX% from at of March of remaining rate second, of

details those on main I more will now provide two drivers.

XXX average rate. our First, I'll yields bonds. discount basis We based with increase asset-backed fair yield notes. start to discount is adjust we point of in the value with our changes the loans consistent quarter-over-quarter of rate the upon use in increase The on weighted the

second assumptions. the in of the in loan of is XXX The fair life value driver charge-off remaining loans our the reduction increase our basis of point

experience the of to impacted the Our for outstanding, charge-off unemployment pool by is significant of loans in Houston, based our our well we assumptions Harvey customers experience are hardship upon our Adjusted recession. as last where projected higher in statistically a providing deferrals XXXX. XX%, as which recession than Hurricane in had previous

borrower actual the connected benefit government because XX include impact to However, on disclosures did the wait on earnings see provided some efforts value assumptions supplemental not regarding our page to fair chose behavior. repayment of our deck. any we assumptions to stimulus We

the XXth previously of and rate, of with helping repayment. the the on XX.X% of our of XXXX declined loans loan and remaining increased The life offset to delivery believe benefits due our life borrowers. consistent in remaining the asset-backed XX.XX% We to checks our deferred rate April a yields deferrals increase due to plateauing in to to returning loan unemployment decrease charge-offs to bonds, of decreased value stimulus loans As in of by an are that charge-offs. discount discount increased increase XX.XX% fair

and year. deck million, credit over OpEx. included overall for some prior associated the our expense costs detail products costs. our quarter earnings card XX in were first these the are with XX% regarding And Our Operating of $XX.X up operating page auto the additional provide

operating For investments. expense QX OpEx to contributed These our XXXX, we recognized of year-over-year to $X.X million these increase. related investments

year comparable adjusted and result, than of was the quarter efficiency quarter the XXXX. our operating XX.X%, last fourth efficiency a As adjusted XXX higher basis points in consistent with operating

employees our the our spending long and product. and safety invest we increased customers we as identifying areas enhance company such completing that discretionary across will and continue actively the loan of personal our development the protect While had of health and over the reducing secured in to company, those spending to term,

in quarter of XXXX Our for quarter. year customer $XXX, $XXX the March. prior decline increase costs from to by the acquisition cap originated the half in the in of of started was first up number in The see was we loans second driven

investments look have our a $XXX customer demand and reduced April efforts due been saw risk. In reduced approval cap tighter approximately by for we to the as marketing XX% Our criteria. redirect we to quarter, overall manage second to to also credit of credit XX%

we it which us While customer as all we budget, can continue order to economy contact tack. current of reopens. for to locations levels to in to maintain have is marketing centers, meet reduced the team and also our ensure demand contributed we in has retail employ our elevated staffing sales believe important We

quarter. Our to effective effective XX% XXXX. rate XXXX, reflects equated of million our as QX was The of was income $XX.X million tax $X.XX loss net diluted our $X.XX compared which GAAP share a rate basis in quarter. the versus prior net the on tax in versus year reduction per earnings in net QX to for per This of share from loss a in prior XX% $XX.X operations year

of the net income and per versus $X.XX million on quarter. was EPS net adjusted adjusted in prior million year share of loss based $X.X $X.XX net loss Our adjusted adjusted $X.X of

in XX.X% on goal and post a quarter. metric or adjusted equity to time, achieve prior consolidated crisis the the minus longer our this income believe basis. term remains teens ROEs was should which high return versus on XXXX of for we our loss net Over QX improve numerator Adjusted X% is year

of very marks fair our cash impact the line, bottom on pre-tax profitability. be believe Given as EBITDA proxy a continues valuable to to we the for our value adjusted use it

In addition value to onetime compensation fair events, adjusted the impact adding and accounting. back taxes, also EBITDA depreciation, non-cash amortization, of excludes stock-based

our first adjusted $XX.X the in For the was million compared quarter, year million $XX.X quarter. prior EBITDA

Interest shared performance. to who already share of we and regarding been with they've us by customers Raul skip credit you told to are And with highlights days. pandemic. onto payments more skip to schedule, the options Deferral are allows end the continues like loan providing have deferral the deferrals accrue the loan. of repayment our for XX added But extending and Emergency on the during customer the the period the I'd Hardship repayment payments our the impacted along economically the term to of you customer's

We in are remain week making next whether capable hardship impacted ask payment emergency to reaching deferral a they if to began they and economically deferral. to a the payment, or another by their out customers prior scheduled of need pandemic

Emergency new seen Deferrals have rate of We Hardship diminish. significantly the

Our reached will. own already And late curve flattening in our if April. we have peak we you believe

owned As of April XXth was Hardship in Deferral. XXXX, XX.X% principal receivables balance Emergency of

of balance. Emergency and encouraging to Deferrals economy declined hope we accelerate of trends Hardship see These receivables have are them reopens. XXth, to X.X% owned May As principal as the

It's that deferral in to also delinquent or prior note were balances XX% are XX. of seven less to days March important that over

our customers are XX% prior with returning of in had XX% with balances In or two loans addition, us. customers more over deferral have belonging who are to best who of balances borrowers that are

and capital Turning liquidity. now to

months, funding do we to or of We continue to during not to access liquidity program this meaning XX need period. our at incremental maintain least funding that our capital time manage runway

equivalents non-cash is includes of liquidity charge-offs, cash $XXX.X our total comprised of at the valuable To XXst and cash $XXX.X our look XXXX, million. statement, but cash to EBITDA cash are also cash restricted adjusted of charge-offs flow March event. of impact was $XX.X of As and million million evaluate

compared the as first our of was from flow cash For operations to million the quarter $XX.X XXXX, for $XX.X year period. million, prior

we from September the of outstanding funding, new XXXX. each allow With remainder term period, in originations for respect us fund loan securitization range to July securitizations have which billion XXXX that revolving $X.X to to bonds

increase certain on through a the we XXst decline of $XXX warehouse undrawn we October as to capacity a March not had had will return million XXXX. warehouse warehouse as undrawn that of of on XXXX our XXth Until our As our we of capacity million originations to line capacity is transferred see have Because issue in $XXX committed we $XXX of April first to XXXX, million warehouse our securitization. pledge securitizations. or growth, from need loans our line receivables new we line, line to loan

Raul base. point the our reiterate touched to want strong also about on I capital

March XXst we adjusted As eight $XX.XX share. or tangible value dollars per of book had of XXXX, $XXX.X

to leverage. low equity we base, ran our addition In capital business strong a having at

to Our a raised reduced our debt to reduction strong a debt equity prior to of QX $XX.X we ratio in the in times X.X as net proceeds year, issue XXXX. X.X our portfolio was growth September times, IPO million fund our the from in need

Turning ongoing the performance uncertainty surrounding external to set financial the dependent this that of to given our impacted for time. the quarter reliably impact this anticipate XXXX, the of and second timing parameters at our too future outlook on will of continue remainder but is be guidance we duration, to pandemic, factors severity the

do expect in expenses XQ line We with to XQ. operating be our

year environment. XXXX, revenue we the For reflect overall full economic our originations will expect and the

to is implementing during uncertain is technology as of know our and impact as this remain to continue period. changes committed emerge working capable we from it And our response customers As rapidly unfold. the adjust to servicing as of and with monitor enabled just this today, discussed, collections, COVIDXX we will time. to what we we rapid we just conditions pricing, incremental on Based our

turn to my concludes back the will now I That Raul. call over And remarks.

Raul Vazquez

low leverage, Thank you, diversified Jonathan. want characterized strong liquidity funding to we that strong built program. In have a I closing, and by business reiterate a

continue during investment serve technology our to underwriting order these customers rapidly to and times. our allowing to approach unprecedented in evolve significant is us in Our collections

applications by well circumstances are my with very optimistic and As teams we've expressing as you customer help increase. are thanks beginning to loan began mentioned, are cautiously at these in Jonathan working who our both our that and we I difficult to this hard during remarks shared trends as time, I credit, to payments indications have recent given customers.

I more than now I this was it crisis proud have confident am am of the year. the than start I never at of will come out employees even that our stronger been Oportun and of

Thank comments. you your and Operator? questions welcome we all for now And time. your

Operator

is Instructions] [Operator Jefferies. first The you. Hecht question from line Please John your the Thank of with with question. proceed

Nils Erdmann

John?

Operator

your line live. John, is

John Hecht

you Can me? guys. Sorry, hear

Nils Erdmann

Yes, we can.

Raul Vazquez

John. Hi,

John Hecht

Okay. update Thanks and to Good very color Appreciate to quarter the helpful much. voice. the the then your is very hear April all from as well.

- First question, Jonathan, of trends seeing not of might assumptions just effects kind delinquencies quarter kind about you I'm so we And like persisted value for the seen, in this it's how those of through of thinking change? about, in forth. if that asking value do if guidance, any think quarter fair the and just fair you're deferrals what and terms on you more conceptual, the

Jonathan Coblentz

Sure. That's a great question John.

mark, March in April of So from transition to our you've what first seen you all, is what already our I'd the mark to right. guide

trends, then we is charge-off favorable that That take of remaining see we the lowering that be continue considered XX.X% assumption to would payments. from in as talked from we our one XX.X%. to loss in you trends to down in cumulative remarks terms assumption down credit percentage deferral it peak could coming we such factors customers some the based of about So our delinquencies, as percentage performance deferrals also said XX.X% XX% favorable X.X%, of in a If further. the making of upon life

an will as as fair that The the know And traded the of marks that increase rate, discount on We April. the of value, saw you sort That's during other the variable. well on is know, function you the yields down a as be price markets. part our bonds to bonds. right independent of

market the asset-backed to market coming to are in general continue increased deals. are Companies firmness. We seeing have with

liability. debt be it So seen side. actually it market of debt improve. you moves over what spreads, time the then were price and expect because value the the rest we our increase be with the that based haven't on then on beneficial to know, value on beneficial it's our of trends the improve be see fair But asset today in may that we overall, seeing of wouldn't right. If increase to credit not along yet, the it an against the we're that side, but would But

John Hecht

helpful. and always an over very several your appreciated unrelated up and as applications online how That's the in the changing past then course the value that about impacts know, business know, the weeks, you of that the platform technology. how you how can the well/ follow of I'm And Okay. and mix stores is questions talk we've versus omni-channel wondering that and

Raul Vazquez

that well point during is and time. moving traffic years to served your very, consumers John, much. that in and Sure. To did us as this to retail place measures of Thankfully capability see We kind in locations. very lot given country diminished Raul. our start this mobile for we fact the believed having has in start end-to-end an in the of a put around place shelter general

to road our from second managing engineers really our higher. And asked prioritize priority a map It's to now, only perspective, mobile enhancements we've even outcomes. credit second

we're continue pleased and decided seeing the environment enhance to faster, to the we're really performance given that So capability even we're in. we've from mobile the with

John Hecht

healthy. it everybody's Great, - hear everybody appreciate and good that to

Raul Vazquez

Likewise.

Jonathan Coblentz

Thank John. you,

Operator

Our next KBW. the from question proceed with Sakhrani of your comes line Sanjay Please question. with

Sanjay Sakhrani

are Thanks. a credit guess, I in to the of wanted do guys Nice you employment quality customers into to more guys discussion. little hear bit dig that lot well. you whole situation. insight I your on a have

structural sort how guess the many loss you Because of how get rate example impact stimulus Thanks. I'm of off look know, I workers. to as maybe been many wears sort are have essential what is forward? furloughed, at just what versus the trying off forward laid assume we is to For going the and let's

Raul Vazquez

Yeah.

that tell that ones level that have that were in their is we you So don't first of our have our What customers Sanjay. customers was I the the population detail would belief lost we of really among terms of that jobs.

as that the So on impact. that our effect, businesses we were started to as customers cut back took believe first saw place different in among labor, shelter that

already in recent applicants verifying there measures know, of for we including our you of even that place a to were in proof income. consequence put were and them verification As coming that had more practices, strengthen asked a a we our tightening job lot that now

or So because the saw were just we losses, wave. like took a so among lot at looked that of last customers some I ban. that or day first by that the again looked I'm income felt measures, in our sorry, and unemployment a data losses job half we job

than earn and lines, people were that So basically less the less XX,XXX, people losses earn for job that were XXX,XXX that to plateaued. of than plus amount and three there XX,XXX, XX XXX

pain So that view customers be think back benefiting as have go our from and our felt to stimulus numbers. is that unemployment the by the the now I work. customers up, delinquency until helping open And are will to benefits. then, way the economy starts And and to back right our they it’s our able

Sanjay Sakhrani

And and loss the like that But assuming know made deferrals guess kind fair we guys disaster a natural you you're situation. how recovery? historically will for how things Are in have have inside cycle? Jonathan at your help of rate Right. is some value of book of mentioned a when that I assuming different given I guys sort loss the you assumption you look that mark. progressed

to follow-up are customers And at then electronically the branch? How your making question. many David's versus other one Thanks. quick just last payments of actually

Raul Vazquez

Okay.

payments. I'll - your Yeah. So let take me

part. start the first Let's with

things. assumption. to your we looked you address couple I triangulation a it's think question Sanjay with is come couple And things me to to order easiest a in at So the loss our up tell between let what a tell three way you

where XX you One, know, seeing experience recession we than environment years, the you XXXX in for our quite obviously lending of then. experience we unemployment loss from And significant was XXXX, in know, relatively current levels actually comparison. so great good statistically we've did higher back have we're been

So we've clearly for extrapolated that.

natural is other this very deferrals at closely know, The that is get customers with helping than though experience back we thing even bigger we track, and on a that disaster. looked you have

a think very I it's comparison. helpful

customers you when had XX% and Harvey in Houston our able So in we know, XXXX we to Hurricane help portfolio were there. of hit

experience that back who work defer plans those when their a reduced them get some can to give then from able feet a with back to full have we potentially you happens of to data income, so but repayment to on make customers, what And them get aren't get wealth time payment. and of for

in our we approach billion we'd we've that stimulus. either in take government to that discussed of that much magnified before. in because like higher of as hadn't taken unemployment driven we data we in levels the trillion and seen experience $X seeing And factor a than scenarios that's we've and didn't the we're fact then those was past. - data remarks on $X What So the of

So and would we factor to we decided wait see customer that before impact that in. how behavior

think the we're are fact so go deferrals customers that an delinquency we've fact the about stimulus seeing we And from the factored fact seeing that before, as down, that the in. is seeing I talked we're good the paying, many impact numbers, that's that potentially

Jonathan Coblentz

Sanjay. and The question that is actuals. answer then forward I'll based about one just to we're it, payment So add thinking that we way on updated that your updating number going to and thought

off of then delinquencies. continue coming do we of you as what obviously deferrals the actually percent manage imagine, can payments, carefully. go are payments, are So do delinquencies look cohorts what the they all deferrals, we into And they making at percentage making

April tell and obviously actuals on actuals. we'll be the continue QX and on would is we we based update when to based season, then again tell that that you So you as Mac see change will QX from to we that you again that saw

let we're fully know, to the like project to when region there pause the questions, Look do up enough you it's if try you manage what carefully. to follow very are going see have What any before to to foolish just actuals by region. numbers me of to recover look going for. we're trying and So we're things you business or asked move not is we payment

Sanjay Sakhrani

No, great. Thanks.

Jonathan Coblentz

Okay.

payments on outside ended month, locations. our over XX% April the payment was of side a So month of were making for we that saw in the customers what

or ACH back mobile more and the payment thirds are solution going either paying people customers So we Sanjay either over start two seen or of to via card. asked, have debit certainly that to mechanisms John use all question our

Sanjay Sakhrani

you. Thank Right.

Operator

with question. line of DeVries from Please Mark proceed Our Barclays. next question with comes your the

Mark DeVries

on think what thought you XX.X%, mean, very good driving you to drop, is just afternoon. I X.X% a deferrals so move was on for feel provide at you and of said like some the Thanks of drop, April weeks do quickly? big and that I have a couple a you it seems hoping color kind that of the some what caused to I that could end believe I

Raul Vazquez

of couple things. Raul, This Mark. It's is a

If this that what deferrals number ways deferrals. of of the are you coming of about one manage and people are think what is, about new off in coming number are the we we think then

the our new earlier seen hit declined wave made of view to that terms customers is that comment I with that of layoffs. that and on So got first significantly the deferrals goes back number our we've

as but available, of when a hardship So to to started our at that few added we kind impacted. of think April end these now. we a March seeing of emergency of really started beginning, the beginning being when we're be consequence we was And quite deferrals very customers few make them saw

and is The And it described or the expired combination coming down. two I have the people as making for and end payments deferrals it. and number really that have people coming XX.X% reasons and off May people was of driving it coming X.X% whom those the of was are are those that out. off driving at people did and in percentage the coming of that's XXth correct, people of then a what's The deferral for numbers the you April things

Mark DeVries

helpful. That's Okay.

you Do or you repayment many Some maybe for to returning for people know, need sources their know, term their know, to of to the of are and shift? the resiliency One are of jobs in income, stress they versus lose is new talked under who the of substitute the your the find you past, that you've a old customers sense if you in have to ability economy jobs? being things able how job. about final about returning

Raul Vazquez

that know. We that's their customers, Mark, it's payment, a job don't Yeah. job. from to don't make our them if or not going something we if current that a they're ask ask new we

to any So I'm I there. insight provide don't afraid, have

Mark DeVries

cited last on you signs just have like up California? earlier And Florida it. you as also I Do of the ground have some Got in like a states some in here that Okay. difference work. positive like thing. open people return think the performance then I mean, Florida feel credit Texas versus originations, any to one opened have been and states that

Raul Vazquez

that But into we historically disclosed go because Mark. dynamic. I'll now won't geographic tell very though piece we originations haven't right I things you the way that So recognize are

We improvements seen cautiously the we've are optimistic based the originations weeks. in on last few

but have year-over-year And last that we to now are to of it one how are week-over-week just a does So at starting we not now weeks, hit right seen over the chosen different make we've bottom. bottom sense of alone, so is the climb couple now. optimistic on out to to try cautiously and us a we of have that of improvements basis week-over-week necessarily the times look ways given basis the on get instead a that

Mark DeVries

Got Thank it. Okay. you.

Raul Vazquez

Sure. Thank you.

Operator

line next proceed your of question. comes question David the Please JMP Our with from Securities. with Scharf

David Scharf

handle is color applying you echo you previous on Hey, I'll in April few very can Thanks is questions. provide trajectory your thanks addressed this and afternoon all to of we're the obviously that's one on answers, but Everyone's weeks. kind on for And in for comments. have what any Raul, helpful. and a last trying this may data. May these there and of taking I'm get curious the of who

some specifically seeing? new a these applicants they're You aren't it's if borrowers? know, whether mean, are clearly all lenders I or and positive necessarily trend other that repeat

Raul Vazquez

there new who are applicants. job find can and either a still capital, expense. trying people to got clearly need that I a you them are and or out This want who people one job, unforeseen don't is out are David, tell maybe a repeat So people their because help we would that have getting has some have and both they've loved applicants time someone lost their to help they do job or where

applications we're customers. new from seeing both and So repay

now. situation, and not the a impacted engine case, we've that their to tightening to applicant of work been that as employer who that and is April profile get successful today of right a What I someone we've the borrower industry proof income, taken in an we likely is able someone And verify current in verify you that actions the been risk employment. more a March who cases some suggests can has in both of in tell by the has the that has after hold job is

is things And environment your this is absolutely David. structure. to much product are prior have person the skewing because that's your I customer. payment to and think one point question of likely The towards have with success people In proven behind a more this who our been we

David Scharf

discussion. That's it. helpful. that maybe And Got following just up on

You know, you income about underwriting tightening criteria the and when beefing up you when talked specifically maybe verification.

and changes you these that employers. the bolts you permanent a little you in forward. be business of terms to the now past about think talk will of income bit which believe one and sort example and the maybe gave nuts in changed of calling But I whether what's just can verification going

Raul Vazquez

the recession. described as So one of great we've terms that is earlier, situation Jonathan before us been of things through this in I helped think the really

works we that playbook well us the of have a the chief frankly also then having have risk same we So and benefit for officer.

have playbook, to we it add person that like able we've still that. only have wildfires, playbook on that the So us but wrote the things and based hurricanes we not to other the with been

outreach things on that specific back to customers, So getting asked we much amounts for your customers just repeat to to to the question, income more am We've quickly, have criteria, loan to adjusted broadly we tightened We enhanced summarize more overnight. first, recent done very efforts skewed I more David. then income. we we lending verification our are answer proof going have and of a

we weeks ago. would or us four to past you stamp three from say allowed have the give in if So a pay

still employment. Now to employed most reflecting stamp we're ask to not your that not for recent you that verify showing you something necessarily going just pay that us and are is your you're current

now. that going right changes, going to to to on not speculate or Whether are I'm be these continue permanent not

takes are practice else now to this the stable people be is and place once the to economy see best a everyone for quickly how to think we is get then does right waiting to recover, do like back we us But think the going how it recovery. I recovery have. work

David Scharf

that or I make Got just Jonathan flat think being correctly, near-term marketing thinking would to total then, about think of it the we down? makes it. No, second sure sequentially I this reduced quarter it should OpEx in costs the be likely in as you lastly context demand. down wrote variable be say sense. Did And spend about we

Jonathan Coblentz

No, OpEx expect that QX say did around flat say would there. be that, you I to heard total sequentially did we correctly. I that

David Scharf

it. Got

Okay. very much. Thank you

Jonathan Coblentz

David. you, Thank

Operator

Shane next Our JPMorgan. your question. the comes Instructions] Please question from line with of with Rick [Operator proceed

Rick Shane

on question. the Hey, What do then guys. well. Thanks and and analytics all was and everybody's It's and value really the sale for taking a my what appreciate quarter the to fair helpful. were doing sort behind that. portfolio on Couple underlying the marks questions this I actual glad detail on of conceptual repayments questions the the of margin? detailed gain hear

Raul Vazquez

on were actual portfolio? you am repayments the sorry, asked, the I what

Rick Shane

Yes.

Raul Vazquez

Yeah.

we slide included the portfolio. the deck, some that we can on view in see had that actually you So the in

and me helpful, cash you cash we of flow to $XX million. I this because page illustrate XX think see get deck, the flow right page be investments here, minus from of operating the would earnings Let where can our

other there then the was will second that's posted terms more main the XX.XX but earnings your that QX. forward. sale things are Now find on driver. on Then detail also margin that's portfolio gain supplemental roll in the for Investor can of you a And the there, few question, our website, have in in spreadsheet,

Rick Shane

Great.

background. reality, apologize. The new Sorry in for the the I dog

Raul Vazquez

right. all quite, That's

Jonathan Coblentz

No worries.

Rick Shane

book, may stocks you tangible do last they trading because hedge value held a those cost. have at particular look repurchase you your be attractive that amortized that at notes to marks, at on but an the know, then I value the attractive notes realize fair to notes against are significant also discount fair offer question not some discounts is trading par. secured substantial are to And in

liquidity the some is right and I'm and either wondering thinking back realize you're buy to opportunities about critical to maintain debt? extinguish now, stock or investments of when I some and opportunities the but

Raul Vazquez

Raul. this Rick, So

that First, We provided. way proud business. remarks, one the a my as now. strength of is as our didn't think lot a know the dynamic challenging our that These excludes of business, in you so about adjusted lot of really million, times. the team to see And we spend There that fair the it metrics of that number but I are the this, how EBITDA, is in executing right talking it I guidance I'm time elements impact underlying mentioned can QX provide investors we the the of value. had was since exceeded for $XX.X of

continue well, we difficult performing to the So is even believe company that during these times.

use to do about, our highest what capital the On is about your to and thinking certainly return for we question shareholders. that's talked of something how is Board we've the want say buybacks, our

you've out, ongoing the environment As now given pointed is. that kind the right Board. our conversation But how sense, think of with makes dynamic an is the preservation most capital of that we

Rick Shane

is that great perspective for to you're an buying things from But Great. debts Look, question I realize certainly deteriorate, everything a that wish the here, back it's redeeming my or stock if going better easy gets call. and had liquidity. if you

think you there you start – how about company, But I as terms a the to growth the just because of and I markets just growth normalize, how trade - as know, a am opportunity. is in off curious again, that

Raul Vazquez

or in we think think How buyback to be about general just we the clear? about how growth

Rick Shane

the would huge ways you world, I that stock about notes But clear buying back of point. opportunity the from you all generate - you all reached we're a at really growth the by versus again of feeling away point how substantial which redeeming sort think or know, either How important returns is if such discount?

Raul Vazquez

on your So the you to was time it a very comment forward we part. last spoke looking

being that brakes thoughtful about very are or to the and has the when team understand to the You hit mentioned need bit times even slow a down there that.

are shift one environment a producing That's managing that capital we for and from believe made outcomes. that certainly great one sure to number it of carefully we credit us in priority. this our to sense making And growth mentality

a to you our as that growth tell I'll team, for reopen. we will But the optimistic opportunity as economy starts return remain

few was than a OpEx keeping about through that a to the believe that we there going made we're and us of this So that side of we things we we're the are sequentially make one reasons all and on is were on ago. question are earlier David months living other flat working event, OpEx, stronger

out It more cards and bank so product hold as But secure reopen, testing of the very to the and to We that something mentioned locations, economy something have of think a the that comments, it excited is ability states making we're business. loan continue with loan. driver continue into abundance a pleased now be about offer we XX we're of like on it we sponsorships, put parts we the and were personal at the way we and have our that's could we're starts in was caution. investments an growth credit we so to things look the mobile in just at we product beginning and other can secured to our introduced in

to reopen. the well start What again as to So actions we've to economy right the right. view taken from starts today our sure to we've that have that sure you're positioned is we are make grow made done we

Rick Shane

we've lot like longer conversations. three It's those ago Got feels it. a than since That's very helpful. it had months

getting hard So guys are thank today. you appreciate all you that's to and where work gone I the in

Raul Vazquez

Thank you, Rick.

Jonathan Coblentz

you, Thank Rick.

Operator

are There call Raul I'd closing for to the remarks. to hand the in further back questions Vazquez queue. like no

Raul Vazquez

very on soon. want for Take us forward care, joining with thank you speaking again much. to Thank we everyone and look absolutely do Well, again you call I to everyone. today's

Jonathan Coblentz

Stay well.

Operator

this Ladies for your and teleconference. participation. does gentlemen, you Thank conclude today's

your have disconnect this time. wonderful a may And lines day. at You

Oportun Financial (OPRT) 14 May 202020 Q1 Earnings call transcript