- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good evening, and welcome to Oportun Financial Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Dorian Hare. Please go ahead.

Dorian Hare

everyone. hello and Thanks, to Chief third Coblentz, Executive Administrative Officer today are Chief XXXX Raul and Vazquez, Officer; Officer. discuss me quarter Oportun's results Financial With and Jonathan everyone objectives will include strategy and statements that future remind I of or future our services, of and forward-looking our the positions, operations operations. remarks today the business and related webcast financial will management made for some on business, of and results to plans call products planned from materially statements differ may contemplated you or to forward-looking results Actual reliance these by those forward-looking and not implied statements. caution we on place undue these filings more results the Commission Exchange the the to September A in for Securities risk caption these are under including our ended quarter Risk materially filing could XX, our set XX-Q forth cause XXXX. release of upcoming with discussion differ the press Form our and factors detailed earnings Factors, that in and on forward-looking future statements of result than we this we make new today as on Any required by are as that other no or to information statements update assumptions of and a these as events undertake obligation law. based call call, today's financial which measures present results operations. information useful believe our condition both we GAAP regarding financial measures, core useful comparisons and and for of which can non-GAAP be of period-to-period provide will will we the our on and Also business to investors at materials full Investor be A earnings in section available the can on list of website. definitions Relations our our found addition accordance GAAP. substitute financial in for presented with Non-GAAP a financial measures measures to and in as not are calculated website all which at appendix investor.oportun.com. of release, our earnings XXXX included is supplement the our A press third the at section third earnings and GAAP quarter reconciliation financial of measures to Relations of available of our non-GAAP quarter are Investor section XXXX the in presentation,

the now this With after webcast Raul. of I prepared will call call, version call available remarks. our is and that, the the be addition, with over being turn to archived will an along script In

Raul Vazquez

and third good is everyone. and a and profitable you close afternoon, an adjusted Oportun members our the an for initiatives. third discuss Today, impacting Thank financial our joining followed quarter how Dorian, by delivered an us. on to strategic strong update environment its on basis. Thanks, performance macroeconomic quarter Oportun I'd on like with update

start me of net delivered Let adjusted XX% million, income with or the following of adjusted million $X.X with $X.XX. summary. of revenue We along EPS $XXX up

and in guidance. Our annualized upwardly net revising was charge we EPS adjusted prior revenue And rate off line our our are X.X% of guidance. XXXX year with full

a update QX, in we prior now what detail Let impact our on Credit initiated standards members. in inform saw our metric On effect. earnings their in tightening you pleased inflation me intended set we to that, credit. you business. actions our in shared I'm of address that is call, of had we regarding most underwriting more including starting July, the actions to significantly these the our with having important starting are

successfully repaid XX% to our profitable in Early-stage exposure already borrowers least in loan first the In downward. to were are borrowers, We delinquencies new at reduce continuing the our new third trending and second to and as are proportionate who of exposure Oportun. to our quarter. quarter, XX% borrowers one quarter compared to more returning XX% increase loans have to the

pre-pandemic to delinquencies half X% declined from levels down the the instance, patterns X.X% typically in back X.X% come from usual below our For X.X% below from divide the September, to in having X.X%. July to are delinquencies delinquencies, declined rise And our now of These range payment the XX-to-XX-day year. to from and first seasonal which trends defaults our X%. XX-to-XX-day XXXX

credit are very we So setting in performance originations we from XXXX. results for and the good credit are QX well with pleased summary, ourselves in up

I'd the to update on with like Starting been underwriting. actions Now have we other taking. you

improve to introducing continue We performance. underwriting and our have leveraging and that will models new are credit significantly

For portfolio. updated instance, model we launched an returning underwriting version on of specifically our focused our

expanding launched more applicants financial use model a earlier of also of transaction share by their complete data, the giving year, we We bank this to their more snapshot the the are situation. providing current opportunity

We also year. by will we that marketing launched of fully new platform the a direct this implemented end be expect quarter the

where the we We mail expect the levels additional digital risk to credit enable able on improve platform target profile. and customers their to direct based will of this new be program channels,

raising last and confidence X week The Our in by strong with senior securitization new was closing of validated additional XXXX. just million our and secured $XXX funding liquidity a remain term fourth also we our Oportun by year of capital them loan. community's bolstered September, in further investment

Our increases ability our capacity fund originations. to to these future financings complete

made we significant on expense growth. Finally, have of progress operating to continue focus and a reduction

by reiterating for are mandate of headcount marketing limiting growth. and year adjusted expenses our We versus reducing half and sales half flat the operating the costs first second

As a to XX%, third objective, quarter over sequentially, by patterns adjusted year level IPO. lowest our efficiency operating since our seasonal expense operating X% achieving declined approximately proof of adjusted and improved basis X,XXX to point our typical year this XXXX define points

on XXXX. order continue As and in are and our more long-term expense you increasing on limiting to to to growing strategic now enhancing priorities, relationships. multiproduct progress can our me our our on necessary Shifting in steps operate the efficiently growth platform take members towards strongest see, update capabilities, possible you we our putting the let committed company to the footing

continuing people. are the our needs enhance We platform hardworking capabilities meet to to everyday financial of

continues annualized integration progress with credit our testing a digit investing single last banking, Digit's the quarter We up Oportun exceeding savings, are on-track to quarter, the quarter a application. at products all overall this end financial ended We performance million our rate. million X% mobile and is and products expectations start into that third X.X from our the together nicely. unified growth members, X.X app brings of to

with on X% acquiring in pace with focus our decreased growth Furthermore, spend new borrowers. grew to member at members third to lower Oportun. increase engagement products continue rate of as quarter, pleased than XX%, new of annualized quality members faster of marketing high given the adding their and are an our this We Oportun,

let new Now activities. update product me you on

we prior loan this deliberately secured on earnings that credit growth as part card As products our year, and of tightening would in our reminder, our the a half indicated moderate call credit personal we in of actions. second

million with sequentially. For third we million our secured $XXX the $XXX personal receivables, from ended up loan products, quarter in

Our at moderate branded Oportun up credit receivables to who members $XXX sequentially. more XXX,XXX card. $XXX grew an than million a pace similarly have from We have now million card credit

from with our increase partner selectively our even make can channel, new to pool efficiently our members, Lending-as-a-Service while which progress we continued also have credit we Finally, applicant and tighten high-quality great we standards. add

partner to include XXX year our up scaled ago we quarter, over third a XXX five and we still hundred the with from XXXX network locations, complete locations. expect During to

first that on QX to $XXX for Sezzle, company a of guidance. that and also our million He our turn our our results. revised on and non-cash Lending-as-a-Service through to to I'd it a with over quarter. performance financial partnership goodwill remains our write-off additional will buy-now-pay-later technical a requirement take details track impacted Jonathan caused Additionally, GAAP this digital accounting launch that, relationship like With you

Jonathan Coblentz

everyone. afternoon, Thanks, good and

income of generated adjusted current us exemplify or our total our third loss. and upside to guidance $X.X the third of slight adjusted expense million be a and while $X.XX had discipline Revenue indicated for net EPS. profitable, enabled prior Oportun’s pleased expectation macroeconomic quarter, Raul In we million of mentioned, revenue resilience $XXX the which quarter under we're environment. business results, As of with the the model

$XXX than aggregate on revenue million Our up X% the million the and originations the above in was range were Total quarter. $XXX with of upside anticipated and year-over-year million for focus and we below initiated $XXX quality the This originations. XX% tightening $XXX modestly reflects guidance guidance reflecting high our down of and prepayments. between credit year-over-year, July prior lower million actions

driven growth We the net as our was by in year higher debt X% we keep partially fixed even XXX% Interest the year X.X% improved end period. due rising Net revenue expense to period higher prior from revenue, into offs expect rate the interest charge the from the was revenue to underwriting with third versus standards. providing million X.X% compared up the rates. and offset was us our up year. tighter and total in fund growth ago expense primarily Net revenue our At continued debt by as year-over-year, of of increase increased debt $XX quarter, protection of $XXX to to of last year-over-year. cost XXXX million issuance XX% interest

million. For we of decrease, which net had our mainly offs period change value, a in current $XX charge consisted million $XX of net fair

The decrease. to September asset the XX.X% to resulted price of For the in rates $XX to resulted in fair spreads XXX and in decrease increase a price decreased mark-to-market the a as mark-to-market, in quarter. million loans back increase of basis $XX average mark-to-market the interest weighted the our credit XX and point during million notes from due our value XXX.X%

to we expenses with on X%. adjusted call operating sequentially Turning prior expense our maintain said we as expenses, discipline strong we would decreasing

the will As the reduce half our year. adjusted flat on of first continue expense going rate Raul in growth be versus forward are to mentioned, we second to track operating and half this

million originations. of period million was online Our year partially $X.X net We the adjusted $X.XX and prior offset direct $XX adjusted from marketing compared down mail lower customer $XXX expenditures X% in income to quarter EPS respectively. and aggregate $X.XX cost lower versus prior acquisition of to the due by year delivered

EPS year, three representing growth. quarters and adjusted XX% combined, XX% adjusted $XX was year-over-year the was income the $X.XX, representing growth first million, year-over-year of For net

impacted Because our goodwill. to million value, our $XXX we a required remained were write-off GAAP by book by mentioned, GAAP market Raul requirement. technical below tangible capitalization As were of results accounting our

were EPS Our impacted income GAAP non-cash this net by and charge.

mentioned exceeding reflection expectations. While our is financial you as is acquisition Digit, write-down a not the to performance, heard Digit's on earlier, of Raul the goodwill which related our

non-cash of future decrease EBITDA quarter. $X.X with for gain million the have other this for affects the intangibles was a year the $XX the the a compared charge, Adjusted quarter, in Because $XX million it this million of company. We to of a any reason. impaired operations prior third was we way in prospects acquired in Digit no loss not

prior adjusted X% flat on to For equity the year period. X was months quarter. return year Adjusted X% of $XX the prior year, EBITDA the in the was million versus

adjusted For XX%. averaged the ROE months, XX last

credit. to now Turning

in managed credit we showed deliver our guidance. our results quarter outcomes well with third to line Our prior

charge rate period. net prior annualized X.X% in was off to X.X%, the year compared Our

consumer reminder, abnormally strong low impact As rate amidst stimulus charge the the was due year's last a to balance sheets, pandemic. including off government of

XX plus day XX, trends charge-off consistent was As increased guided which previously delinquency rate we September the to. of was with our X.X%,

million. and $XXX cash capital liquidity, was as our Regarding XX, of total September

from cash year-over-year. XX% quarter for the flow up third Additionally, million, net operations $XX was

impairment our goodwill Also non-cash debt-to-equity I our September available Our the have of charge and lines X.Xx impact ratio XX, been absent the undrawn would as in growth. X.Xx. and warehouse $XXX to ratio just fund our was combined of was million discussed; of debt-to-equity million $XXX

We maintain tightened are strong well positioned while high to selectively we quality underwrite credit loans posture. in our liquidity, our

Raul supports continued to that we in important the have capital in tighter in credit access consistent our term we we track our million under and adopted the September. non-dilutive secured the expect $XXX provides in even environment. of business beyond, to capital that emphasize a maintained underwriting current XXXX that growth criteria senior the investment have We and It's X-year record markets. that new closed loan mentioned this facility

to note fourth issuance, of $XXX asset our backed and also investor funding disclosed our support model. We access XXXX, securitization reaffirming for our a business million

to XXXX, remain that tightening we discipline mentioned. expectations growth credit focused continuing rest on prudent by the Raul Turning profitable cost the for of our and

originations income of $X to of guidance, total million, aggregate $XXX $XX to and $XXX our EPS adjusted the $XXX to fourth $X.XX of $XXX for outlook million million In adjusted quarter net to $X.XX. revenue of terms of million million, million is;

full the million million adjusted billion $X.XX $X.XX. $X.XXX originations year total of net million $X.XXX $XX adjusted revenue of for aggregate and $XXX billion, guidance to $XXX income of is, updated $XX to EPS million, to Our to of

we've under loans performance that. originating significantly driven been originated forward, by credit tighter two dynamics. the prior credit and Going loans our since portfolio will standards different The July be to

driving Let than down July. The me loans performance originated is first early-stage trending start credit already defaults with having delinquencies with tightening better the and the effect of XXXX. we've our payment since desired

we the With we've the the this expected quarter. these see to additional included offs our will originated trends almost loans the in earnings quarter loans in have slides prior in be can regard fourth to July, originated prior presentation entirely these to from to tightening. charge we You

points. charge net we or minus XX XX.X% annualized For the fourth quarter, guiding offs, to are basis plus

from we XX of year, full basis plus in lower rate reduced average offs, points. more prior full are $XX of Approximately keeping basis in daily charge we amounts expected, increase income the to these year points $X of for of our points and leading that million net X.X% quarter. increasing tightening worth basis our minus For credit only mind and expected year fourth guidance reflective expectation. adjusted this full offs, the to XX guidance the revision XX $X forecasting in the even effect by previously for or is receivables million charge million after charge-offs are It's origination incremental to than denominator in upward the represents

up tighter portfolio per make standards XXXX. the vast This turn the our only means the X.XX Additionally, because the half year. we more originating credit portfolio loans under is of second the years, by average July the of portfolio in than life that will will once majority over started of

loss our ninth the another Raul I comments expect I'm in to are summary, we XXXX, quarter fourth will some line to revise range first losses of year, now In we elevated the over that of consecutive our rates and to XXXX quarter, we X% pleased quarter of projection for quarter it in for a our quarter into third remains turn to before today the that, delivered by to strong back the open that With XXXX. start have position X% While we and will profit questions. target Oportun’s that this final decreasing return outlook. profitable upwardly

Raul Vazquez

Jonathan. Thanks,

our fourth company of company employees. look of and am confident the stronger resilience report exceeded results the behalf our we let's With line continue and Oportun responsible, Oportun operator, continue our determination I as pandemic quarter will the expectations forward the exhibit that will to economic growth financial did ever we from deliver challenging shareholders. next to before, and environment, outlook than to this on in emerge questions. quarter a just has I crisis. up open reflects on February. our and will our talented when The This for the providing profitable reviewing that, XXXX following

Operator

And question Mark [Operator with our from Barclays. DeVries Instructions] first comes

Mark DeVries

other aware of? of should new side changed the you there that it we hoping the clarify or are you was you year? what's could for I just guidance kind are what primarily Is credit gave EPS confidence the for on there drivers seeing be

Jonathan Coblentz

Yes, Mark. It's Jonathan.

of things. So I think it's a number

So first we take largely when And was given two second, the unexpected delivered very we is that the look you $X beat a had which for by not million in discipline. of at revenue slower really that that's expense the was then driven things; inflation XQ, all, prepayment by driven One, strong occurring. rates we by and portfolio, beat

adjusted you quarter-over-quarter, about as operating heard X% and So million. actually comment, by Raul reduced expenses I which both we is $X.X

those So we trends. feel about good

short-term is The other beneficial thing which gone in mark-to-market. is up, the the be to relative going yields have to

Mark DeVries

are did markets? deal, How of execution in on you comment kind what did then any to ABS that And on the observing execution? And your past be how impacted your like impact may your ability just hit latest your to target how great. Okay, returns? you compare could funding

Jonathan Coblentz

Sure.

little So down our year in over a we securitization on million to Thursday. AA It we to and closed tranches fourth week. the the successfully all was amortizing last from sell offering BB a were of able $XXX a

of on basis. a chose reflected the interest do current it current in of reasons and market. credit spreads, very to So one successful the that's an rates the market certainly was amortizing offering but it context It we

of our the about quarter. When funds, it's overall funding. it X.X% was long-term look you a not So cost for piece at of

Xs a manageable. basis, rising But the blended into next very on that's quarter. that overall, And so we see

in our that We warehouse continue are personal there's funding. loans, lot investors of the purchasing interest to run have committed source our be could a lines which 'XX and another whole through loan of through from

and we to need So good about the grow capital very we business. ability to our fund access feel our

Mark DeVries

wanted you? are covenants the to all debt goodwill make that do any don't impacted at by And you have just impairment, sure,

Jonathan Coblentz

no. No, We not. do

Operator

from question KBW. with next Our Sanjay Sakhrani comes

Sanjay Sakhrani

look because Appreciate was your thought being you than dealing as I cadence, charge macro us the little X%, rate that migration anecdotally with the quarter to the what talk is result with we of pluses customers just how back And fourth mentioned, guess be? first minuses secondly, year and then next would But charge Jonathan. you bit X% higher higher Two about now questions it that Raul, you what there could higher out. maybe like the are financial inflation, providers. a you guess each less buy half of some I liquidity higher that. rates, with of later off et book just also give and the the from higher that a from the on of just when other net FinTech et and sort more the rates, pay give about as to impact offs. on Could should the think some environment, could cetera Maybe us cetera. now like players, Also, than color that

on So, rates? X-part loss Thanks. question

Raul Vazquez

Yes.

So, part. Sanjay, first take the I’ll

be QX, our course expectation lower call prior where they same losses are to before QX to were think, than the and I year. over of continue that as from we to downward continues the trend the to our expect in earnings be

Jonathan Coblentz

and from a very expect two to be us I to And bit add credit and right has where that, expected I'd to I'll And wanted little where a right perspective, Sanjay. in was be. impact go it, say I us that inflation that put we're to up. as last transparent the the call it to of did We delinquencies book you right. seeing were we components that back the

to range XXXX up to QX transparency and going Jonathan point the hit back expected X% to X% we'll of as peak some in the we'll down mentioned, we timeframe. during the just to provided we've then losses start in We pandemic. same I'd it like that also to But their get provide out, the started and go

So I'm really are tightening proving to pleased actions with how be. effective our credit

If see as that's first consistent with levels. now six you pre delinquencies the you're look our then below on and deck, to to earnings defaults our are payment And quality at early-stage going are declining, pandemic quantity. opposed of originations focus page of

know be good we're total we perspective, very that's Revenue for So going from was into going think million up to and credit right? XXXX. ourselves year-over-year $XX up rate a a we well setting XXXX a run revenue,

run would expect losses expense that So in lower with think XXXX. that revenue combined us is setting XXXX we well the really, we rate, for the discipline, higher really up

Let that me question before there if and answer other see have credit you questions I pause you any Sanjay? posed. second the on

Sanjay Sakhrani

No, can you think I continue, probably.

Jonathan Coblentz

Okay.

terms competition in we're a from a of from what and perspective So perspective. seeing, both consumer

In to attractive competition, in credit terms to we provider base. a be customer continue of very our particular of returning

the So we're there. we're that performance with credit demand I'm with I'm that pleased the pleased seeing. seeing

say below, our of from know the I'd So most attractive credit. at one competition to XX% capping providers that we we're of still by a rates perspective, going and be

is Our score net XX. promoter still

I a consumer a From of perspective, to that Higher again things it's we've have They're the in impact tiny just at. gas bit. inflation. the really up really the where feeling So move rents, we're like started past. about talked

focus repeat more to back down, again on be and to a bit very, our inflation demonstrated start borrowers. focused originations that's So on who's we loans. see And new we once customer start to to the when to with stabilize we'll continue coming starts economy very success that

Sanjay Sakhrani

impact from providers second just lot back, we've they're of pulling some feel now providers? there's of buy an FinTechs on hearing don't You a follow don't your feel diminished like that's the these of And Because and right? to the from customers? pay an that is impact later you on the second to up liquidity had like been part what from question,

Jonathan Coblentz

makes I attractive mean, it I a think credit. when others us provider as pull back, more of

experience customers We're impact on credit. come providers it's of They with really the with for to themselves hard In having that us to of other the that talk the terms credit. the customer dealing don't about they're necessarily know.

Sanjay Sakhrani

much. that efficient the I I basis? last trying about Okay. on this is pluses mean, remaining and and ratio mean, to ratio Maybe was the that sustainable just here minuses think I'm expenses Great. efficiency one go-forward on should a think just that Thanks. backdrop. the and in about you improving how And great. it how the of so efficiency could we talk just

Raul Vazquez

Sure.

expenses we can. We flat are committed as to very keeping as

we out over last product Even XXXX, and product, secured when we that the card as investments Digit into as were our recognize we made go then few the credit headcount as certainly the eleven acquisition. made we in building building we out years, were an we

feel the So that organization is today. we right-sized

base support So we and today. with we that really feel this higher headcount we that the have go ahead revenue can

So very on is we actually on think posture that, our expenses sustainable.

Operator

JPMorgan. Shane Rick Our question next with comes from

Rick Shane

Slide really Thanks everybody terms questions I'd of couple of in delinquency trends. things. this afternoon. my a we look put like for taking And of in take Can quick context the the X? this a appreciate clarity at I to

the the elevated. first were of can So We the here impact pretty first defaults obviously, see underwriting. half year, tighter payment the of significantly

weekly timeline loans weekly on tighter on weekly trying is a due, basis? when the a how first chart, the understand, of payments or through bi-weekly? are bi basis, quickly or provided Given since it on to a you comes this underwriting I'm and

Raul Vazquez

Sure.

started we the So to And those see the this look and starting to buckets. those I'd as some our drive Rick, page early ahead down your then stimulus to tightening. say, states. you reflecting before that of Page at at first defaults the started are when then we you consumers that bleed we kept payment change, X into at the ability delinquency look already new that look into XXXX, of had, to beginning the as when lean right you and was go right, really economy

You stable. portfolio the seeing happens September. what of up the right That's we to not delinquencies the usually August of end at end this to percentage the and time of end are are X the of going pretty current from year. come of that the down one-to-seven-day time, the can to been XX At July see same has

So trends. seasonal defining we're

we're underwriting stage improved in see X.X% starting defaults see feel we So XX which went the could those that to from you payment X.X%. to the impact XX of that as to And in and first delinquencies. already tighter it those well, early

Rick Shane

Got it.

really I'm the on really there guidance to that's through payment this default And first is fourth interested increasingly third was if tightening like chart, quarter for as basis, quarter sort in is, or quarter look the And for curious underwriting? in And you of a of again. even when helpful. portfolios, month-over-month, three tightening the Okay. what's in happening it what now tighter. look fourth this I'm became the terms that's are quarter, this book tighter think interested you in the a most understand we reason context back we looks the seasonal I'm of should book, And underwriting the that and want moved at of it static that, if we I as how

Raul Vazquez

At this were make on engine that to and allows got it's to high-level, portfolios. really think No, It's really then really, three it portfolio is of book. we're the that tightening us a quickly as you seeing. as a with seven one continue based And two. Thankfully, make adjustments not building not we've at then to I action. page think if look tighter don't us underwriting. what it I to it of that we're changes back allows underwriting again,

tie our look returning portfolio, the look say in at they'll they'll the internally within will in within and loan happen at at is portfolio, opportunities that opportunities, then to it new what So to within and start look then team different to sizes. tie

in work There's and So able say, of question tie two the of possible. just able best the it that's very being being a as we more. that and guidance. and to it's additional decisions not It's sequence not got reflected that's tightening we've think reflection in QX necessarily more coming books. a make more in much to to But of

Rick Shane

fair And the underwriting clarify what within perhaps just for it is than was of that described end my just want to to apologize the ask July, Is I was that questions, waiting was are peers tighter there that but progression at of to end say quarter? by that September, it perhaps this. the I you who

Raul Vazquez

Yes.

that think Rick, because be would appreciate really I question. the I fair.

But in of certainly to I focused the originations, difference, look the at we so that go think million at that that the business. XXXX profitability two to not improving lower us guided more it the ourselves to quantity. originate think than quality in originations losses we're very in sense one we underwriting this XXX number again, QX, for could and difference in say position demonstrate, our makes of the X, look the to of to. our most and efficacy engine for environment We can way is ahead on we've way keep QX ways the

So in that would be the first quality over quantity.

to XX%, the we QX we're that being talked new borrowers not borrower and have from choosing pick XX%, group. origination choosing that population. where less to new normally going borrowers, would we about within QX being The second We're quality volume means XX%, just that borrower being today. QX And that of make coming to to at that a lot if you that the look it percentage volume is, originations make we're that highest means new

as characterize So question and it picking to on returning more opposed on I would borrowers a focus think to I as new best high what quality great a part. deliberate was the our that your on choice part portfolio

these that in months. really last have we tightening it's incremental to two expect as to opposed that say, So

Rick Shane

the is at judge agree to over I growth the clearly loan performance on And you this going market the look, credit point.

Operator

Our next question comes from with David JMP. Scharf

David Scharf

X% my think Nobody's you guideposts question of thematic are? Rick at to paying you point. the to of or into is more see that uncertainty X% meeting of much meeting little bringing how list, that asked correct. is Actually, before even it lot a of targets, strategic percent ultimately kind about metrics range? more in but a -- was Some you been need more engine. what those to whole the such to to attention restart internal conditions is guideposts are there? if everything's your in attuned Is within as internal and losses as certain are visibility macro you, you pretty origination Or volumes on given that out maybe much more Raul. already But internal for origination you it that this XXX% just

Raul Vazquez

question, say, David. I'd both. for Thanks it's the

at So first performance that are defaults. We time, on the plus see with same levels. to delinquency looking XX you. want two looking and at We we look internal rate are those our back want are delinquency from to things the see to a we But really the the want get inflation early unemployment. shared metrics. at buckets our We we macro to historical absolutely at environment, payment

to say, up and are that let's for macro in to be there regret too we the that open wouldn't the the but was environment to to we'd about and decision. up uncertainty at numbers So having elements much, argument we'd the we'd ranges because really point dynamic to, the and internal then catch-up still some starting And be that that open getting start the wanted of potentially more. environment. we sake We concerned having deteriorate

internal really to to starting three front is and our and two the be like better. So lights we start is, see that still like see unemployment inflation and across of to really to like of growth opportunity an really get We'd we'd If back combination numbers comfortable see the from down we'd get like perspective. it's kind very in when those open to that's see what to a we'd of come of continue taking we things, stability will advantage green us. up to

David Scharf

reason the was move. we like still Arguably, entirely revenue defined on of of the twice unemployment and a too of sounded still rates. basically it particularly questioning as is versus revenue in Actually, Maybe you not of lower the seeing. to follow-up headwind up extent prepayment us in ahead seeing just of you've well move Rick's are what sort related, it definition false third no given tightening think kind the there more any a or the QX, was as it's expression are fourth bitten indicator. quarter questions. shy, pricing beat once lagging on have magnitude to quarter the went QX I not It along we that but guide which

it expected, Now be Jonathan in of a to ahead said, was revenue same but said the breath contributor that to coming guidance. in was

rate prepayment I slower more is is than kind down cautious -- indicator of the even coming anticipated? the one is that outlook So near-term? nation you tamping that original in mean, keep

Jonathan Coblentz

of know we for that, way. seeing rest to for the that's rates meant why it's factor the the we fourth lower What we guided, rate that expect prepayment reasons revenue that And we one see time that at at it we are were right? that in Jonathan. the higher among saw was others quarter don't the to I don't to than so, the the I quarter. of origination David, as why least see say now, outlook, and we relates the

David Scharf

high-quality Got payment rates meant more that one it. were Yes. No, negative on liquidity on patterns. just I indicator consumer and payment

Raul Vazquez

is And someone's This happy David. payment got a happy right? then we say $XX still it as indicator, a need if to an payment, go and we are pays capital payment, wouldn't I member make because a and that negative are where payment of times off may give repeat Raul. loan to ahead them they'll a loan. take for that $XX and $XX early, there are we their have think

right just money managing people what is I now think seeing their are we're carefully.

just for just to we part. necessarily that it's prepayment being expected. indicates lower that than member’s indicates penalty benefit going would've the So think ended don't lower QX, And benefit on in prepayment us QX. a our stress. management prudent and a in create think We up it And creates we

that a investors we borrower? for as think outcomes. can over think doesn't really negative are right, is is and which how How don't that we really and originations. the us impact think controlling right the for necessarily sure repeat level for a origination marketing we about, we The our do credit that we Rick as So now, of quality. borrower? make as on put that, is it looking we about having command it focus repeat that of of degree deliver do strong So put again, you what bulk it How

David Scharf

any uses as significant of in activity. at many brakes as given of in your positive accessing a a the kind degree shares I of you're that one. putting a capital, well A well the on just highlighted as other your flow recent the Got free on magnitude one cash capital. as as capital both there your aren't seems little that last you've discount On you markets paradigm mean, for to debt well origination obviously it. could bit further the Maybe still buybacks overall book, comments success on discuss? being as liquidity. like It

Raul Vazquez

this in our take careful to environment, to down. clearly is really we very they're try it mean, back to inflation to think to Fed that bring indicating sense the capital, makes unique Well, action going right? continue be I with

in of the showing not and environment to and buybacks bit to hopeful believe this in think and a undervalued. we the the boards To see we our a capital guidance, do strengthen is We've profitable environment. the we guidance, stabilize thing our to ahead that today point, continue our quarters and onto now, more So having prudent David, price demonstrating going planning think increased to have perspective. confidence we're monitor to so early to in best navigate credit are certainly macro we the do the most capital. investors consecutive hold there if We're use increasing but these that things stock from go macroeconomic which is ability a is absolutely that now until we're results nine your profit that's out moment that figure company we'll

Operator

John comes with question Hecht next from Our Jefferies.

Raul Vazquez

you. Hi We hear John. can't

John Hecht

And some of call difference opposed I you about that on did already you overall but that Like of yield about and of forward card It a back the dovetailing over and -- the you've as it book. underwriting recurring customers, there's addressed, more will in do apologize what to just topics next the characteristics? they to the mean, do us the be for the going well. tell might but that anything how versus how other that. then new thinking I versus you or did as the think mix book maybe I quarters? secured, I'm we few to unsecured, tightening in asking was change as question affect book the like

Raul Vazquez

Yes.

I So say would borrowers. the of that back that returning characterize the is book is the number borrowers way that new new book the the difference is one the -- mix versus absolutely book versus

of moving last a look When what the just give mixes us capital have MetaBank fantastic to calls opportunity gave to on a few before the that rates the expanded we to acquire had that bit was was partnership, war, before started measures. still the just sought up. of quite you We a states, new like. sense based new over This thirty There borrowers. through it obviously stimulus people

So it have for we new represent borrowers reduce to as you went made XX%. sense were then us of making. And at XX% see now the we and XX% to us started we loans that, to

credit that book. fantastic borrower book for the difference, CAC. has John, So a lower is new years, and performance, one I'd say who number between And you've someone know back known that, returning this us that is the you because

most portfolio. report the quarter. us You of most It's this the CAC profitable and also saw part proven lower

we difference borrower that makes books. the would today, that in the of biggest be think it terms on really So sense to focus

John Hecht

in channels highlight of you the And Meta always of across is board kind how you've you talk then -- had you are doing using in just you what of tightening new channels. of you any lots different mentioned or Meta. or developing that products terms changes Maybe doing channels to to can Maybe to the grow? marginally kind talk about guys have is to or respect are with -- anything

Raul Vazquez

Sure.

channel tightening have marketing team partnering is the does those with them. also risk team channels risk with the perspective, the So part the highest on a of that that associated outcomes focusing and from

easy for mail, It's of that to going mail you So because are a turning select get of more them channel one who the example very to to is send portfolio. shift to. direct you to

have So mail the on returning direct we focused population.

locations. you where that's degree take have whether of places seen is some it. Some we where advertising put certainly Those more way say a place or have to Selection new borrower. of of the that keyword online online the acquisition are of cut much don't we historically channels or being better because back, have on pre-selection

loan been true what on it this been say be channel-by-channel that, It's a focus. is we product. of to say continues getting focus that, were for, engine really we From been it on. perspective, business. to trying have quarter that we been are I'd the that, looking product we on really the and personal So hasn't focused mix That focused really again unsecured last that's showed profitable

cards. now, in We continue strategy. to multiproduct focused believe But growing we our are right on credit not

We are the personal secured growing loan not focused on book.

this on focused elements have kind infrastructure We really improved product got and those groups collections, any that in of and can servicing environment. be of the

Operator

from Loop comes Capital. question Hal with next Our Goetsch

Hal Goetsch

that we're to still I early first being guidance. so. where down But derivative next that's happened. is dealing of you seen delinquencies, normal on the in is year not would derivative or of quite the spend we first are the marketing fourth implies this improvement originations It to to a already is, is. sell normal just default quarter of it that's know first might appears out be -- want kind know losses, to What for year. Since turn take in with improvement significantly. know some not I next I Because want already improving. me origination level. down what really the that XX% came of to guys it tightening paid back

Jonathan Coblentz

be to to borrowers then We back every strong inflation good for our We'd left we'd right like comes current, we about pay going see see given down environment. the because have be little to like We after to money to they what questions, quarter. after the down. bit that really because to for We're pretty words every us on quarter. they're over having And they've we we come inflation. know see rate felt We over if market they're that would really don't. to left like quarter the money want low. a job It's the some the strong Yes. focused paycheck our Hal, paycheck. we borrowers When and challenges. need it see? thanks Thanks a more our and borrower, thought We'd the back got when to delivered have continue know unemployment for about kind a

to So just before see normal more to for start really to That's lower get more prospects. look kind volume. marketing lean need we job back and to into a inflation starting borrower us strong back we of seeing and what economy with new

Operator

with Our Sakhrani KBW. next question comes from Sanjay

Sanjay Sakhrani

thanks. about costs, I on the a did I something. a up of those follow related. like how Jonathan, about maybe you know trying offerings, more think forward? had of I net a I'm we margin couple costs debt numbers guess, should think just interest couple Hey, questions, going just or to

debt to be think fund we of or XX%. costs, to you as those as of you've that higher the it some I invest calculate use Should go sort the it, sort of loans.

Jonathan Coblentz

be will margin if asking You're the interest net future? in higher

Sanjay Sakhrani

NIM think should how about Like Yes. going forward? we

Jonathan Coblentz

Yes.

it'll fours for it's next the And from taken So for X.X% higher We're a creep funds in third things. of right? at quarter, we've to component be there. is pricing perspective, actions Obviously, we're looking a quarter. and balance more going but at NIM up, the the of cost opportunity

that but flow actions later portfolio. pricing So of it next I more come somewhat, decline do think year NIM through the see we'll as the should back

Raul Vazquez

interest and rate there the of add P&L. are Certainly, looking an reducing look said, point, the We're yield, where focused NIM charge the to origination is we're focused fee rest the on that. Jonathan's to more in from whether we're increase right, every opportunities if opportunity. That on that to can or to for Just our that's we something little expenses for ask a areas we to perspective. continue team also

charge ahead that's that the going we OpEx so just go talking with to And to a into we absolutely reasons overall that we this about that -- focused shown. driving reduce times, And And spend help I'm at down hinted to something the the expect of couple offs, has time that lot of can losses business. we're we're is this pleased we the we in with profitability know is the because be of a and One discipline control. want us take discipline is team our XXXX. because of then clear, if on but really

looking of very not question OpEx half credit for to XXXX a second perspective We're the roll earned little of So same mentality are the relative into that this to going performance, again the sure an hiring, with and first marketing making by is environment. just expenses half. from the expenses

So you are absolutely right.

expense are the P&L, we and really those adjusted performance We but are of in company. focused on focused big other NIM, lines the income at looking overall net on also improving the

Jonathan Coblentz

And just point year-over-year our talked to basis to improvement about Raul, add we thing, efficiency. the one XXXX in operating

for X, XX% when X that, is while below If you about you mentioned that equation OpEx think revenue grow, we if said, on by flat got number, yield we then revenue has compare better that just more. even then about relative yield, the would as obviously So it's stay right? you OpEx to the continues it's And Raul to and we have we already. made changes the NIM,

Sanjay Sakhrani

cadence a that, just of I and understood the make I the to appreciate of maybe value. question can sort the technicality just cap with impairment that. but And Understanding then of is wanted offline we I the on sure sort No, that. talk And just charge. second market book

or Like that about market impairment continues I'm come the in right? to as, impact. charge just charge set does impairment decline whatever back to cap at that forward ROE about think we -- should level think So the unfortunate that reason, some for trying point? event

Raul Vazquez

and one done. it's No,

Sanjay Sakhrani

Okay.

Raul Vazquez

strict GAAP rule. very a It's

future if well tangible write would had, be future there off we to And book write-up would goodwill. goodwill we the we trading have written value, more all kept -- are the don't nothing in And there is so above that we so no downs.

Operator

Raul This Vazquez would to to like question-and-answer conference back the any closing session. remarks. concludes I for turn our over

Raul Vazquez

soon. on Thank Just speaking once forward again we joining to us for to you. again look today's thank you everyone and with call, want

Operator

you presentation. now The today's for attending has conference concluded. Thank

You disconnect. may now

Oportun Financial (OPRT) 8 Nov 222022 Q3 Earnings call transcript