OPRT - Earnings call transcript Q1 2024 | Oportun Financial Corporation

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Operator

Hello and welcome to the Oportun Financial First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It's my pleasure to turn the call over to Dorian Hare, Investor Relations. Please go ahead.

Dorian Hare

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

Raul Vazquez

Thanks, you for and joining Today, everyone. Dorian our you performance quarter update on focus. areas progress afternoon, Thank our discuss I'll and us. of key good first on

with begin me Let X of QX performance. our highlights

million, at XX% This guidance $XXX the took net top-end million, income of XX range driven better or basis yield higher higher our interest guidance increases price at portfolio than strong points by last a range, points we've basis $XX March of QX revenue hold the outperforming our been generated with of rate and and we rate anticipated.Second, the enacting by X%. our annualized was sequentially charge-off First, outperformance as than lower was low-end X year. a and

X%.Third, improved, EBITDA second XX% of team substantial generated year-over-year.We turning QX operating declined positive summary, how pleased of million of a more in progress improvement was net showed income quarterly I'm million, at our million.In executed in was income million were XX% year-ago improvement year-ago our And, signs net net that quarter. Our the quarter, proud adjusted first of $XX the reported our from EBITDA more quarterly $XXX million year-over-year million income, GAAP $XXX even on $XX year-over-year. during X time and this last $XX positive XXXX.Finally, $X profitability operating our Adjusted the outlined update highlight net improvement seeing. by markedly instance Starting which GAAP you the below an expenses $X was business adjusted our I'll adjusted million, expenses quarter strategic gives has credit, for down I both and from me dynamics with XXXX losses. expected GAAP recovery we're measured in outlook. the and dollars The under in on the with just we charge-offs consecutive confidence earnings now our we're that that making last priorities, sequentially call.I'll

XXXX predecessors. First, of run are you now we're front more continue vintages loss presentation, X basis book approximately their encouraging, that QX joining outperforming when Even can as for seeing XX front loans, loans XXX with on compared now Slide that to our earnings see of more lower book to group. of or vintage our post-disbursement recent back points our more rates book the our months

material XX starting accounted still We book As of in front and then.Second, book back balance for principal of trends XX now prior gross the January, originated on tightening our day late comprised the to book XX% of our in roll third, quarter, and and of you XXXX; back XX% to also to we of of of levels Slide to are since owned comprised to throughout back a at first the the of at July end continued X book end loans the are starting XXXX which well our see charge-offs. that originations delinquencies, owned in to early-stage March. the XXXX X% impact loans XX is reminder, delinquencies expect into started running experiencing of book our this the is first to of shrank February back diminish shrink principal disproportionately to positive day the in below delinquencies. positive but year.And the the can trends X balance

you and on update I'm our to fortify with to the make from day business these pleased down expense continue will XXXX, that already plus I'd during QX which further and XXXX, points our priority trends outcomes were to management XXXX.Improving our progress down from delinquencies X.X% drive XX favorable priority, year.Relating made XX in over basis progress. the top expect credit during this to we've expect like QX is We QX to economics

XX% to with horizon.Jonathan see X OpEx during details will XXX year of basis years substantial we've remaining including improvement you profitability to keenly our summary, to you track QX significantly operating Secured presentation, than midpoint let or shortly, XXXX.In which balance of with a of more principal on at progress to XX.X% SPL but to of XXXX the Adjusted full share year percentage remain in our the for Personal adjusted X or expenses expansion I As can return know quarter, see identify our below and And, million our IPO XX% originations, focused on our you today like on XXXX, points I'd down prudent almost XXXX. profitability, operating made a we the priority raising to guidance million to outperformed get the are product, average expectations expense was QX by QX first our we versus adjusted management by you expenses ago. range.Shifting Loans, X. on are want our that efficient by we Slide in earnings more GAAP managed to below we in high-quality were Slide as QX $XXX for on the EBITDA achieve can even highlight $XX.X

as Florida, last end Loans of we our biggest retool in our and the states, of only the Available Pathward. of quarter. the due reintroduced California a and launched rebalancing SPL desire paused the priorities to partnership in reminder, states the end and year, next during in originations of our Personal XXXX of X X summer Secured in a with we Texas at to first As XXXX

rolling are time We month, also relaunched Illinois the during SPL the in and New Arizona in and for out quarter. earlier Jersey product this this first

loans but economics. on losses run XX% revenue expanding approximately over larger.In for lending, are last was expansion since, autos, members. to our XXX by responsibly our We us excited collateralized SPL as Personal addition, to SPL better is because Not did only members' over serve secured basis unsecured, of points higher, which year the $X,XXX its are Secured superior per loan allows average, Loans about compared of unit lower

summary, of first who Jonathan am first performance, year for to XX remains second weren't adjusted strong pleased applicants an conviction during as on be it quarter Our our our and a details SPL allowed turn Personal second able full we and to basis our profitable on loan.In over yet to to invite with Loans apply will our additional better first us for our approve quarter quarter XXXX.With SPL guidance. as quarter I than quarter product expect that, has we Unsecured well performance I an to for very X financial

Jonathan Coblentz

afternoon and good Raul, Thanks everyone.

and remain product. and upon we beyond Savings to As our Loans X in a substantially Raul differentiated, positioned Secured increasing first We focused driving Personal are well products: mentioned, of performance quarter Unsecured the in and our profitability our performance as strong XXXX as core improve throughout our the on by balance had year.

operate while from continue of our year-end. credit to will with costs we year-over-year. Oportun with tightened net pattern million of a adjusted income on maintaining quarter, typical revenue down We million, or the were so posture.As Sequentially, of to the $X adjusted total aligning EPS to fourth conservative $X.XX. of under $XXX credit do originations were $XXX XX% Continuing returned delivered following Slide XX% posture, originations profitability shown XX, and and million, down seasonal reducing

increases future than actions, These our of year-over-year originations I loan average credit for subsequent application demand us basis originated. points. profile year-over-year, to were of am of price the new new expected points improving for drove portfolio resulted year-over-year our better members revenue to our well as credit volume that outperformance size and decline loans as XX.X%. quality pool pleased XX% to originations growth by incremental share yield these loans dollar This of our for outpaced better number X% percentage While in also This XX from growth due the XXX improved. when tightening members declined decline sets up increased return loans.The

to marks expense. We higher reduced XXXX and lower XX% $XX our will million, to cap.Net to yield by due value charge-offs, enhance fair year-over-year, throughout markedly was while partially revenue APR committed non-cash up remaining continue interest offset

we outstanding up million in the year-over-year. GAAP benefits was our driven higher our million financials. from Interest $XX X.X% to environment.Turning expense $XX debt in of operating and versus fair the initiatives. period Our efficiency, year-ago offset in reminder, optimization debt the last we primarily debt on our by period, see reflecting value mark-to-market million cost of largely structure of was previously charge-offs to now a by to by was were our the elected $XX value loan year financings adjustments on remaining total stop mark-to-market $X net new as the notes.As million current of mark-to-market to asset-backed valuing fair $XXX fair value our was driven favorable million. primarily portfolio fair X.X% our decrease rate increase expenses increased and Total in the This by continue cost announced

in Our $XXX expenses period. total the prior-year QX a in operating million from reflected XX% reduction

million continue will lower to with earnings $XX operating we drive that We call. XXXX reductions structure our of expense annualized additional announced in on cost our last the

$XX.X were at our just We our pleased target expenses.In that level lowest continue the since was the first over million share And, XXXX. second XX% $XX QX sales expenses of to of quarter down to year-over-year. XX% GAAP I'm quarter, marketing $XXX our down in and and CAC operating million, year-over-year

by of period sharply in This portfolio structure.Now, and For was credit of net-charge on strong increase expectation a net the income quarter. adjusted loss discount in compared net mark-to-market net share prior-year operating excludes current our adjustments $X.XX. of $XX let with driven which $X EPS EBITDA, and loss in XX, of our This profitability performance. versus Slide off both a the portfolio prior-year loan reflected the marked in cumulative quarter, cost year-over-year along notes, by remaining million, our on adjusted driven QX million, million quarter, as impact losses, rate fair primarily was improvement million the recorded and expenses discuss $X value adjusted we our and credit $XX to me increases loan of mark-to-market declined.Adjusted first per reduced reduced adjusted a $X.XX

at guidance the was range. XX% prior-year Our of This low-end charge-off compared period. annualized net in of to XX.X% our the rate

day sequentially year-over-year XX by declined basis plus XX points Our delinquency by XX points rate to basis X.X%. and

XXXX as liquidity, over last years XX, forward. were X $XX strong XX% when was shown improve below XXXX.Regarding and running year the activities XXXX day As from expect flows year levels below for first Raul well XX below ago, operating the capital quarter net Slide on were our continue million, year. The our the were rate cash and to plus mentioned, our running to we up at early stage delinquencies early-stage time going are buckets prior delinquency levels,

Further share As million million. minus $XXX I that getting our product, XX, secured evaluate review XX, and million $XXX that liquidity, of million our to we restricted. strategic net to rate basis funding end $XXX to months.Before want continue million and a you a $XX I'm to agreement million, million, term the to also to loan bit capacity and $XXX additional shown with refinancing or $XXX completing bolstering remaining loan.Turning Total of liquidity minute our sale warehouse sell Slide closer Adjusted share loans outlook unrestricted and card X $XX of points. is: on now our spend total in quarter $XX on lines of under was one options March signed was providing an was $XXX available capacity EBITDA we the I for was quarter over which a with plus whole to our leave cash guidance million of since million.Let our our of partners XX million are capital our more next our color. of new of second we pleased credit revenue agreement annualized of XX.X% $XXX charge-off discussion of me to senior as whole

on First in decline QX. will seasonally in origination QX portfolio means lower that the slightly volume our revenue,

flat-to-down However, portfolio to to growth driven expect the the only expected yield revenue for at see flat credit, you entirely charge-off so charge-offs respect to QX QX QX compared QX.With to to lead net slightly portfolio to higher base.On can guide rate. a by down in receivables lower is midpoint be we dollars impactful will XX, charge-off our Slide sequentially, is annual annualized how be higher

ongoing resilient strong EBITDA the the adjusted operational improvement throughout at profitability, our midpoint million the and improvement on expect cost QX Finally reflects for in discipline to $XX the rate year.Our million.I'm you remainder full XXXX from year-over-year by you. reductions, of the billion, $XX points, plus cost $X of $X.XX reflects back million to continuation pleased full-year in business recovery growth.Raul, at further approximately adjusted Driven over full-year million and to we sequential of we our net XX the minus million top-line QX. able that provide EBITDA guidance underwriting million prudent our is: the year annualized $XX over improvement of to guidance the revenue guidance Total last amidst EBITDA initiated charge-off year $XX XX.X% basis for or adjusted midpoint, of or tightening, $XXX to with reflecting we're of credit QX XXX%

Raul Vazquez

Thanks, Jonathan.

X to year.To sustainable I welcome Board featured and the to also to of independent at participate that: Directors. vice serves quarter previously on benefit highly up, a Oportun's at Shareholder Parker focus as finance Services to provider we and execution our income officer an Ryder and JPMorgan, qualified, as and the first net Independent want disciplined risk-management wrap previously follows the driving Director at with Express, officer will currently I and Before led as Findell pleased and agreement profitability. contributions Rich, Small Holdings. additional Oportun's we president of financial other XX. Capital continue Board over Scott publicly I and adjusted Rich was management GAAP Independent like A to welcome NationsBenefits, profitable, Retail chief Services Holdings, healthcare chief meetings Scott election April with I'd of at Rich's which our held to at Board of Scott and risk improvement a perspectives at industry. have Business Scott officer our last individuals close, fintech leading to as in growth. a Group. cooperation million Board announced American of stand Observer. Rich that CIT and supplemental of appointment related chief an has benefits seasoned Scott to CFO, OneMain officer Annual previously $XX Tambor the solutions added chief Including for from on want Financial Scott's Richard served and as Director XXXX positions agreed System, institutions.The was also executive risk at We're and function Meeting. OneMain He performance, to executive as risk team emphasize has the return

XX% below adjusted we're in business towards book. our intent ROEs QX cost to unit and and and is levels in I our Oportun and their to let's the million an our structure recovery thank economics guidance we while $XXX for are year.We want elimination to team on for expectation we talked I We that, line XXXX near up XX% confident questions. outlook mission. the to exit execution target driving model.Finally, support continuing solid thank revenue an EBITDA presented with shareholders raised our the in ongoing when the to want their belief Operator, March adjusted reaffirming about And, commitment our and also in have open annualized first our basis that back profitable Oportun.With on the to this peak for and our of be expect their

Operator

[Operator is first Instructions] Citizens from JMP. Our question David from coming Scharf today

David Scharf

base just to wanted little in the guidance more the a on I by expense year-end. into dig

that ROE have products, annualized that expense further? in down loans, is in secured rate $XX $XXX it's think you're working at levels. peak million quarter annualized. million When annualized look I on what, guide to does you've personal target Or off the about had order run state Based we on, mind? run a come XX% XX% achieve mentioned everything target, eliminated to $XXX expansion, reigniting level fourth rate, other you whether your the million that to

Jonathan Coblentz

Yes.

with little to we are fourth our right? of this So for that targeting a that quarter results generate XXXX there, those OpEx may of gave and run is the intention $XX.X that million clearly, a inflation. as We the GAAP side. less on with number But run million presented that business so deck XX a that that gets that's rate over larger, say OpEx we the $XXX XXXX with to would we'll below Page the $XXX we the time we'll for to little growth, we time, the this indicated went David, around year right? is bit on last which entering of be reaffirmed call our lean as when economic able be unit out guidance, we than model And is grow represented on be So think OpEx the and time, very million. I first

David Scharf

to maybe It's And resources. be that just to on follow-up kind are able fourth just of you a some know to it whatever, to it, hard digit much an guide. exact product, internally. some quarter there's or how to put sort I former savings get allocated $XX context, you on that of the refer shared is number of but or however million to digit going the share

Jonathan Coblentz

disclosure. Yes, David, we don't provide that

So unfortunately, not to a I'm in on that. comment position

Raul Vazquez

David, would across been we've say, budgets in I Raul. executed what is, is product have the this that would all say Well, clearly, I reductions and staffing What lines.

the So product. there environment, clearly, ability a the kind is is the be were year significant generate in important. second pretty a amounts to announced savings closing contributor of well to to been of as of of team we savings row, the have in last have that We the economic been organization. cash several And the reductions for products year this going And the on cash big part acquisition. that of

mentioned were were pleased than those the with then delinquency in -- role had people the cash both were that call So not. that app that were that in lower savings who of using rates generation. that XX% earnings And borrowers terms last we using we're playing it's the

also is driven team is benefit -- by the we're pleased that So with work being the work good that that doing. that,

David Scharf

the to line through guess, loans. partners, maybe one had personal on press for up just renegotiations, that in just comes X I in warehouse last committed another core maturity mentioned as you And September? I follow It's update on for months, the X September. or -- funding. the Any release, new

Jonathan Coblentz

Yes. Sure. question. No, great

on working So we've interested of a already and we've got lots parties. renewal, started

so recall, call oversubscribed surprising credit ABS a And XXx but the in may actually takeout to market. I the I towards you specific well. least came not and priced in earnings right the to we with was the deal, look our tighter the on have shared a say lenders substantially going now, fact very it asset-backed the and expected. the market performance And than in don't as improvement in that's given principally And that update process given term opportunity would which and to me, share warehouse February, last we million $XXX is

strong. So remains the market asset-backed

personal that warehouse bodes continue to very successful line secured for well have renewal. We a and access, renewal,

Operator

Next Hurwit question Matt today is Jefferies. coming from from

Matthew Hurwit

question. any Are general there sheet items Just modifications to balance or to sheet payments continue from debt any to highlight? balance management David's in upcoming or actions

Jonathan Coblentz

No, I would say no.

Matthew Hurwit

product, time? terms in what percent not, this for of that the able are do portfolio that And Okay. us see runway sort you is the at you of of with product? what Or SPL to share if

Jonathan Coblentz

We disclosed the at March we the It's It's press release. that. that said end product was million. -- the in $XXX SPL of actually

into relaunched quarter, obviously, we've So starting expansion additional states. the just last

So year. we this course grow the expect will that over certainly that, of

Raul Vazquez

a managed of $X billion. And about that's portfolio Matt, on

Operator

session. I'd floor over question-and-answer back for our the of end the comments. like turn to further reached We closing any

Raul Vazquez

today's thank we to us again of look forward with all call, on soon. you joining want and to speaking you We for

Jonathan Coblentz

you. Thank

Operator

That teleconference you. webcast. does conclude Thank today's

thank you You your participation for may have disconnect wonderful your line and We a today. day. this time, at

Oportun Financial (OPRT) 9 May 242024 Q1 Earnings call transcript