Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun”, or the
"Company") today reported financial results for the third quarter
ended September 30, 2022.
“Oportun delivered a strong third quarter, while
exhibiting responsible growth and disciplined expense management
amidst ongoing macroeconomic headwinds. I'm pleased that the
further credit tightening actions we implemented in July are having
their intended effect," said Raul Vazquez, CEO of Oportun.
"Lowering our approval rates and shifting our focus towards
returning members enabled us to drive down early stage
delinquencies and first payment defaults, which ended the quarter
below 2019 pre-pandemic levels. Nevertheless we continued to
execute on our long-term growth strategy by adding high-quality new
members at an annualized rate of 9% to total 1.9 million, with
product adoption continuing to outpace membership at an annualized
rate of 11%. We also raised additional capital with a new four-year
$150 million senior secured term loan supporting our future
securitization and warehouse line financings, and following the
quarter completed our fourth securitization financing of the year.
Our revised guidance reflects our current expectation that each
quarter in 2022 will be profitable on an adjusted basis. We are
raising our full year 2022 revenue guidance to a range between $946
to $951 million, and our Adjusted EPS guidance to a range between
$2.19 to $2.25."
Third Quarter 2022 Results
Metric |
GAAP |
|
Adjusted1 |
|
3Q22 |
3Q21 |
|
3Q22 |
3Q21 |
Total
revenue |
$ |
250 |
|
$ |
159 |
|
|
|
|
Net income (loss) |
$ |
(106 |
) |
$ |
23 |
|
|
$ |
8 |
|
$ |
24 |
|
Diluted EPS |
$ |
(3.21 |
) |
$ |
0.75 |
|
|
$ |
0.25 |
|
$ |
0.78 |
|
Adjusted EBITDA |
|
|
|
$ |
(6 |
) |
$ |
18 |
|
Dollars in millions, except per share amounts. |
|
|
|
|
|
|
|
|
|
|
|
Business Highlights
- Members were 1.9
million(2), a 9% annualized increase during the quarter
- Products were
2.0 million(3), an 11% annualized increase during the quarter
- Aggregate
Originations were $634M, down 4% year-over-year
- Managed
Principal Balance at End of Period was $3.35B, up 56%
year-over-year
- Annualized Net
Charge-Off Rate of 9.8% as compared to 5.5% for the prior-year
period
- 30+ Day
Delinquency Rate of 5.4% as compared to 2.8% for the prior-year
period
|
1 See the section entitled “About Non-GAAP
Financial Measures” for an explanation of non-GAAP measures, and
the table entitled “Reconciliation of Non-GAAP Financial Measures”
for a reconciliation of non-GAAP to GAAP measures. |
(2) Beginning 1Q22, the Company modified its definition of Members
to reflect the long term nature of its relationships with its
members. |
(3) Beginning 1Q22, the Company modified its definition of Products
to reflect multiproduct adoption by its members. |
Financial and Operating
Results
All figures are as of September 30, 2022, unless
otherwise noted.
Growth Highlights
Members – Members as of the end
of the third quarter grew to 1.9 million, up from 1.8 million as of
the end of the prior-quarter, a 9% annualized growth rate for the
quarter.
Products – Products as of the
end of the third quarter grew to 2.0 million, up from 1.9 million
as of the end of the prior-quarter, a 11% annualized growth rate
for the quarter.
Originations – Aggregate
Originations for the third quarter were $634 million, a decrease of
4% as compared to $662 million in the prior-year quarter. The
decrease is primarily driven by fewer loans originated due to the
Company tightening its credit underwriting standards and focusing
lending towards existing and returning members to improve credit
outcomes; partially offset by growth in average loan size.
Financial Results
Revenue – Total revenue for the
third quarter was $250 million, an increase of 57% as compared to
$159 million in the prior-year quarter. The increase was
primarily attributable to higher interest income due to growth in
the Company's underlying portfolio. Net revenue for the third
quarter was $147 million, an increase of 5% as compared to net
revenue of $140 million in the prior-year quarter. Net revenue
improved from the prior-year quarter due to higher revenue,
partially offset by a net decrease in fair value of its loans.
Operating Expense and Adjusted Operating
Expense – For the third quarter, total operating expense
was $259 million, as compared to $111 million in the prior-year
quarter. A non-cash, non-recurring goodwill impairment charge of
$108 million was triggered in compliance with ASC 350 Intangibles –
Goodwill and Other by the decrease in the Company’s market
capitalization, which was primarily driven by macroeconomic
conditions. The other intangibles acquired in connection with Digit
were not impaired. Absent the impact of the goodwill impairment
charge, total operating expense of $151 million declined 4% from
$158 million in the prior-quarter, Adjusted Operating Expense,
which excludes stock-based compensation expense and certain
non-recurring charges, increased 27% year-over-year to $136
million, growing slower than total revenue which grew 57% in the
same period. Adjusted Operating Expense improved sequentially from
$140 million in the prior-quarter.
Net Income (Loss) and Adjusted Net
Income – Net loss was $106 million as compared to net
income of $23 million in the prior-year quarter, driven by the
impact of the $108 million goodwill impairment charge. Adjusted Net
Income was $8.4 million as compared to $24 million in the
prior-year quarter. The decreases in net income and Adjusted Net
Income are attributable to increased operating expenses and a net
decrease in fair value, partially offset by increased revenues. For
the first nine months of the year, Adjusted Net Income was $65
million, representing 23% year-over-year growth.
Earnings (Loss) Per Share and Adjusted
EPS – GAAP net loss per share, basic and diluted, were
both $3.21 for the three months ended September 30, 2022. GAAP
earnings per share, basic and diluted, were $0.82 and $0.75,
respectively, in the prior-year quarter. Adjusted Earnings Per
Share was $0.25 as compared to $0.78 in the prior-year quarter. For
the first nine months of the year, Adjusted Earnings Per Share was
$1.95, representing 11% year-over-year growth.
Adjusted EBITDA – Adjusted
EBITDA was a $6.2 million loss, down from a $18 million
gain in the prior-year quarter. Adjusted EBITDA remained flat
at $23 million for the first nine months of the year compared to
the prior-year period.
Credit and Operating
Metrics
Net Charge-Off Rate – The
Annualized Net Charge-Off Rate for the quarter was 9.8%, compared
to 5.5% for the prior-year quarter. Last year's charge-off rate
benefited from the impact of government stimulus and was below the
Company's historic average.
30+ Day Delinquency Rate – The
Company's 30+ Day Delinquency Rate was 5.4% at the end of the
quarter, compared to 2.8% at the end of the prior-year quarter. The
Company has seen a decrease in early-stage delinquencies, with 8 to
14 day delinquencies and 15 to 29 day delinquencies of 1.7% and
1.8%, respectively, as of September 30, 2022 as compared to 1.7%
and 2.1%, respectively, as of July 31, 2022 when the Company
further tightened its credit underwriting standards and focused
lending towards existing and returning members to improve credit
outcomes.
First Payment Defaults – First
Payment Defaults on newly-originated loans are trending better than
2019 levels due to the Company's tightening of credit underwriting
standards and focusing lending towards existing and returning
members to improve credit outcomes. The Company regards First
Payment Defaults to be an early indicator of credit performance as
the outstanding principal balance of loans that have their first
payment past due are regarded as more likely to default and result
in a charge-off. First Payment Defaults are calculated as the
principal balance of any loan whose first payment becomes 30 days
past due, divided by the aggregate principal balance of all loans
originated during that same week.
Operating Efficiency and Adjusted
Operating Efficiency – Operating Efficiency for the
quarter was 104% as compared to 70% in the prior-year
quarter. Adjusted Operating Efficiency for the third quarter
was 54%, as compared to 67% in the prior-year quarter. Adjusted
Operating Efficiency excludes stock-based compensation expense and
certain non-recurring charges, such as the Company's retail network
optimization expenses, impairment charges and acquisition and
integration related expenses. The decline in Operating Efficiency
and Adjusted Operating Efficiency reflect the Company's revenue
growing more quickly than operating expenses.
Return On Equity ("ROE") and Adjusted
ROE – ROE for the quarter was (70)%, as compared to
18% in the prior-year quarter. Adjusted ROE for the
quarter was 5.6%, as compared to 19% in the prior-year quarter. For
the last twelve months, Adjusted ROE averaged 17%.
New Products
Secured personal loans – As of
September 30, 2022, the Company had a secured personal loan
receivables balance of $116 million, up 293% from $30 million at
the end of the third quarter 2021.
Credit card receivables – As of
September 30, 2022, the Company had a credit card receivables
balance of $131 million, up 242% from $38 million at the end of the
third quarter 2021.
Funding and Liquidity
As of September 30, 2022, total cash was $272
million, consisting of cash and cash equivalents of $176 million
and restricted cash of $96 million. Cost of Debt and Debt-to-Equity
were 3.9% and 5.2x, respectively, for and at the end of the third
quarter 2022 as compared to Cost of Debt and Debt-to-Equity of 2.8%
and 3.3x, respectively, for and at the end of the prior-year
quarter. As of September 30, 2022, the Company had $309 million of
undrawn capacity on its existing $600 million personal loan
warehouse line. The Company's personal loan warehouse line is
committed through September 2024. As of September 30, 2022, the
Company had $73 million of undrawn capacity on its existing $150
million credit card warehouse line. The Company's credit card
warehouse line is committed through December 2023.
On September 14, 2022, the Company entered into
a credit agreement for a $150 million senior secured term
loan. The term loan is scheduled to mature on September 14, 2026,
and is not subject to amortization. Certain prepayments of the term
loan are subject to a prepayment premium.
On November 3, 2022, the Company completed the
issuance of $300 million of Series 2022-3 fixed rate asset-backed
notes in a private asset-backed securitization transaction secured
by a pool of unsecured and secured installment loans.
Financial Outlook for Fourth Quarter and
Full Year 2022
Oportun is providing the following guidance for
4Q 2022 and full year 2022 as follows:
|
4Q 2022 |
|
Full Year 2022 |
Aggregate Originations |
$650 - $700 M |
|
$2,962 - $3,012 M |
Total Revenue |
$255 - $260 M |
|
$946 - $951 M |
Adjusted Net Income |
$8 - $10 M |
|
$73 - $75 M |
Adjusted EPS (1) |
$0.24 - $0.30 |
|
$2.19 - $2.25 |
Annualized Net Charge-Off Rate |
11.9% +/- 25 bps |
|
9.9% +/- 20 bps |
|
1 Based on 33,396,557 and 33,268,453 shares
outstanding as of the end of each listed period respectively. |
Conference Call
As previously announced, Oportun’s management
will host a conference call to discuss third quarter 2022 results
at 5:00 p.m. ET (2:00 p.m. PT) today. The dial-in number for
the conference call is 877-300-8522 (toll-free) or 412-542-4174
(international). Participants should call in 10 minutes prior to
the scheduled start time. A live webcast of the call will be
accessible from the Investor Relations page of Oportun's website at
https://investor.oportun.com. Both the call and webcast are open to
the general public. For those unable to listen to the live
broadcast, a webcast replay of the call will be available at
https://investor.oportun.com for one year. An investor presentation
that includes supplemental financial information and
reconciliations of certain non-GAAP measures to their most directly
comparable GAAP measures, will be available on the Investor
Relations page of Oportun's website at https://investor.oportun.com
prior to the start of the conference call.
About Non-GAAP Financial
Measures
This press release presents information about
the Company’s Adjusted Net Income (Loss), Adjusted EPS, Adjusted
EBITDA, Adjusted Operating Efficiency, and Adjusted Return on
Equity, which are non-GAAP financial measures provided as a
supplement to the results provided in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”). The Company believes these non-GAAP measures can be
useful measures for period-to-period comparisons of its core
business and provide useful information to investors and others in
understanding and evaluating its operating results. Non-GAAP
financial measures are provided in addition to, and not as a
substitute for, and are not superior to, financial measures
calculated in accordance with GAAP. In addition, the non-GAAP
measures the Company uses, as presented, may not be comparable to
similar measures used by other companies. Reconciliations of
non-GAAP to GAAP measures can be found below.
About Oportun
Oportun (Nasdaq: OPRT) is an A.I.-powered
digital banking platform that seeks to make financial health
effortless for anyone. Driven by a mission to provide inclusive and
affordable financial services, Oportun helps its over 1.8 million
hardworking members meet their daily borrowing, savings, banking,
and investing needs. Since inception, Oportun has provided more
than $14 billion in responsible and affordable credit, saved its
members more than $2.3 billion in interest and fees, and
automatically helped members set aside more than $8.5 billion for
rainy days and other needs. In recognition of its responsibly
designed products, Oportun has been certified as a Community
Development Financial Institution (CDFI) since 2009.
Forward-Looking Statements
This press release contains forward-looking
statements. All statements other than statements of historical fact
contained in this press release, including statements as to future
results of operations and financial position, achievement of the
Company's strategic priorities and goals, the Company's future
growth opportunities, ability of the Company's $150 million senior
secured term loan to support its future securitization and
warehouse line financings, and the Company's fourth quarter and
revised 2022 full year outlook, and the Company's expectations
related to future profitability on an adjusted basis, are
forward-looking statements. These statements involve known and
unknown risks, uncertainties, assumptions and other factors that
may cause Oportun’s actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. These statements can be generally identified by terms
such as “expect,” “plan,” “anticipate,” “project,” "outlook,”
“continue,” “may,” “believe,” or “estimate” and similar expressions
or the negative versions of these words or comparable words, as
well as future or conditional verbs such as “will,” “should,”
“would,” “likely” and “could.” These forward-looking statements are
subject to the safe harbor provisions under the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of
1934, as amended. Oportun has based these forward-looking
statements largely on its current expectations and projections
about future events and financial trends that it believes may
affect its business, financial condition and results of operations.
These risks and uncertainties include those risks described in
Oportun's filings with the Securities and Exchange Commission,
including Oportun's most recent annual report on Form 10-K and most
recent quarterly report on Form 10-Q, and include, but are not
limited to, the impact of COVID-19 on the Company's business and
the economy as a whole; Oportun’s future financial performance,
including aggregate originations; trends in revenue, net revenue,
operating expenses, and net income; changes in market interest
rates; increases in loan delinquencies and charge-offs; Oportun's
ability to increase market share and enter into new markets;
Oportun's ability to expand its member base; Oportun's ability to
realize the benefits from acquisitions and integrate acquired
technologies, including the Digit acquisition; the risk of security
breaches or incidents affecting the Company's information
technology systems or those of the Company's third-party vendors or
service providers; Oportun’s ability to successfully offer loans in
additional states; and Oportun’s ability to compete successfully
with other companies that are currently in, or may in the future
enter, its industry. The forward-looking statements speak only as
of the date on which they are made, and, Oportun disclaims any
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is
made or to reflect the occurrence of unanticipated events. In light
of these risks and uncertainties, there is no assurance that the
events or results suggested by the forward-looking statements will
in fact occur, and you should not place undue reliance on these
forward-looking statements.
Contacts
Investor ContactDorian
Hare(650) 590-4323ir@oportun.com
Media ContactUsher
Lieberman(650) 769-9414usher.lieberman@oportun.com
Oportun and the Oportun logo are registered
trademarks of Oportun, Inc.
Oportun Financial
CorporationCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in millions, except share and per
share data, unaudited)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Interest income |
$ |
232.1 |
|
|
$ |
145.4 |
|
|
$ |
632.0 |
|
|
$ |
401.2 |
|
Non-interest income |
|
18.0 |
|
|
|
13.6 |
|
|
|
58.6 |
|
|
|
31.4 |
|
Total
revenue |
|
250.1 |
|
|
|
159.1 |
|
|
|
690.6 |
|
|
|
432.7 |
|
Less: |
|
|
|
|
|
|
|
Interest expense |
|
26.7 |
|
|
|
10.6 |
|
|
|
57.5 |
|
|
|
36.2 |
|
Net decrease in fair value |
|
(76.4 |
) |
|
|
(9.0 |
) |
|
|
(135.9 |
) |
|
|
(26.5 |
) |
Net
revenue |
|
147.0 |
|
|
|
139.5 |
|
|
|
497.2 |
|
|
|
370.0 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Technology and facilities |
|
56.1 |
|
|
|
34.2 |
|
|
|
158.1 |
|
|
|
100.3 |
|
Sales and marketing |
|
21.8 |
|
|
|
32.1 |
|
|
|
88.7 |
|
|
|
79.7 |
|
Personnel |
|
40.0 |
|
|
|
29.0 |
|
|
|
114.5 |
|
|
|
84.4 |
|
Outsourcing and professional fees |
|
18.6 |
|
|
|
13.3 |
|
|
|
50.1 |
|
|
|
40.8 |
|
General, administrative and other |
|
14.4 |
|
|
|
2.7 |
|
|
|
44.7 |
|
|
|
22.9 |
|
Goodwill impairment |
|
108.5 |
|
|
|
— |
|
|
|
108.5 |
|
|
|
— |
|
Total operating
expenses |
|
259.3 |
|
|
|
111.4 |
|
|
|
564.6 |
|
|
|
328.1 |
|
|
|
|
|
|
|
|
|
Income (loss) before
taxes |
|
(112.4 |
) |
|
|
28.1 |
|
|
|
(67.4 |
) |
|
|
41.9 |
|
Income tax expense (benefit) |
|
(6.5 |
) |
|
|
5.1 |
|
|
|
2.0 |
|
|
|
8.7 |
|
Net income
(loss) |
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss) per
Common Share |
$ |
(3.21 |
) |
|
$ |
0.75 |
|
|
$ |
(2.12 |
) |
|
$ |
1.11 |
|
Diluted Weighted Average
Common Shares |
|
33,010,107 |
|
|
|
30,503,773 |
|
|
|
32,688,988 |
|
|
|
30,059,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationCONDENSED CONSOLIDATED BALANCE
SHEETS (in millions, unaudited)
|
September 30, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
175.9 |
|
|
$ |
131.0 |
|
Restricted cash |
|
96.4 |
|
|
|
62.0 |
|
Loans receivable at fair value |
|
2,991.3 |
|
|
|
2,386.8 |
|
Interest and fees receivable, net |
|
30.6 |
|
|
|
20.9 |
|
Capitalized software and other intangibles |
|
139.1 |
|
|
|
131.2 |
|
Goodwill |
|
— |
|
|
|
104.0 |
|
Right of use assets - operating |
|
32.1 |
|
|
|
38.4 |
|
Other assets |
|
74.7 |
|
|
|
72.3 |
|
Total assets |
$ |
3,540.0 |
|
|
$ |
2,946.6 |
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
Liabilities |
|
|
|
Secured financing |
$ |
365.1 |
|
|
$ |
393.9 |
|
Asset-backed notes at fair value |
|
2,238.3 |
|
|
|
1,651.7 |
|
Acquisition and corporate financing |
|
241.8 |
|
|
|
114.1 |
|
Lease liabilities |
|
40.1 |
|
|
|
47.7 |
|
Other liabilities |
|
105.4 |
|
|
|
135.4 |
|
Total liabilities |
|
2,990.9 |
|
|
|
2,342.7 |
|
Stockholders' equity |
|
|
|
Common stock |
|
— |
|
|
|
— |
|
Common stock, additional paid-in capital |
|
540.9 |
|
|
|
526.3 |
|
Retained earnings |
|
14.5 |
|
|
|
83.8 |
|
Treasury stock |
|
(6.3 |
) |
|
|
(6.3 |
) |
Total stockholders’
equity |
|
549.1 |
|
|
|
603.9 |
|
Total liabilities and
stockholders' equity |
$ |
3,540.0 |
|
|
$ |
2,946.6 |
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in millions, unaudited)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
Adjustments for non-cash items |
|
209.3 |
|
|
|
14.6 |
|
|
|
308.6 |
|
|
|
72.8 |
|
Proceeds from sale of loans in excess of originations of loans sold
and held for sale |
|
0.1 |
|
|
|
6.2 |
|
|
|
6.2 |
|
|
|
15.6 |
|
Changes in balances of operating assets and liabilities |
|
(35.9 |
) |
|
|
3.3 |
|
|
|
(86.1 |
) |
|
|
(18.0 |
) |
Net cash provided by operating activities |
|
67.7 |
|
|
|
47.1 |
|
|
|
159.3 |
|
|
|
103.7 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Net loan principal repayments (loan originations) |
|
(264.0 |
) |
|
|
(249.0 |
) |
|
|
(1,123.6 |
) |
|
|
(295.7 |
) |
Proceeds from loan sales originated as held for investment |
|
0.7 |
|
|
|
— |
|
|
|
247.9 |
|
|
|
— |
|
Capitalization of system development costs |
|
(13.2 |
) |
|
|
(6.9 |
) |
|
|
(36.8 |
) |
|
|
(18.5 |
) |
Other, net |
|
(1.3 |
) |
|
|
(0.7 |
) |
|
|
(3.4 |
) |
|
|
(2.6 |
) |
Net cash used in investing activities |
|
(277.9 |
) |
|
|
(256.6 |
) |
|
|
(915.9 |
) |
|
|
(316.7 |
) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Borrowings |
|
918.8 |
|
|
|
745.2 |
|
|
|
2,654.8 |
|
|
|
1,762.8 |
|
Repayments |
|
(569.4 |
) |
|
|
(669.0 |
) |
|
|
(1,810.8 |
) |
|
|
(1,491.0 |
) |
Net stock-based activities |
|
(0.9 |
) |
|
|
(0.8 |
) |
|
|
(8.2 |
) |
|
|
(3.6 |
) |
Net cash provided by financing activities |
|
348.5 |
|
|
|
75.3 |
|
|
|
835.8 |
|
|
|
268.2 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents and
restricted cash |
|
138.4 |
|
|
|
(134.2 |
) |
|
|
79.2 |
|
|
|
55.2 |
|
Cash and cash equivalents and restricted cash beginning of
period |
|
133.9 |
|
|
|
358.0 |
|
|
|
193.0 |
|
|
|
168.6 |
|
Cash and cash equivalents and restricted cash end of period |
$ |
272.2 |
|
|
$ |
223.8 |
|
|
$ |
272.2 |
|
|
$ |
223.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationCONSOLIDATED KEY PERFORMANCE
METRICS(unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Members(1) (Actuals) |
|
|
1,858,335 |
|
|
|
772,361 |
|
|
|
1,858,335 |
|
|
|
772,361 |
|
Products(1) (Actuals) |
|
|
1,981,310 |
|
|
|
772,361 |
|
|
|
1,981,310 |
|
|
|
772,361 |
|
Aggregate Originations (Millions) |
|
$ |
634.2 |
|
|
$ |
662.1 |
|
|
$ |
2,312.5 |
|
|
$ |
1,430.4 |
|
30+
Day Delinquency Rate (%) |
|
|
5.4 |
% |
|
|
2.8 |
% |
|
|
5.4 |
% |
|
|
2.8 |
% |
Annualized Net Charge-Off Rate (%) |
|
|
9.8 |
% |
|
|
5.5 |
% |
|
|
9.0 |
% |
|
|
6.8 |
% |
Return on Equity (%) |
|
|
(70.1 |
)% |
|
|
18.3 |
% |
|
|
(16.1 |
)% |
|
|
9.1 |
% |
Adjusted Return on Equity (%) |
|
|
5.6 |
% |
|
|
19.0 |
% |
|
|
15.0 |
% |
|
|
14.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oportun Financial
CorporationOTHER
METRICS(unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Managed Principal Balance at End of Period (Millions) |
|
$ |
3,351.5 |
|
|
$ |
2,147.9 |
|
|
$ |
3,351.5 |
|
|
$ |
2,147.9 |
|
Owned
Principal Balance at End of Period (Millions) |
|
$ |
2,969.7 |
|
|
$ |
1,862.1 |
|
|
$ |
2,969.7 |
|
|
$ |
1,862.1 |
|
Average Daily Principal Balance (Millions) |
|
$ |
2,903.9 |
|
|
$ |
1,741.4 |
|
|
$ |
2,633.2 |
|
|
$ |
1,654.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The 772,361 Members and Products reported as
of September 30, 2021 reflect our previously defined and disclosed
"Active Customer" metric. Products presented as of September 30,
2021 represents one product per member as the Company did not have
members with multiple products at that time. Effective January 1,
2022, Active Customers is no longer a Key Financial and Operating
Metric.
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationABOUT NON-GAAP FINANCIAL
MEASURES(unaudited)
The press release dated November 7, 2022
contains non-GAAP financial measures. The following tables
reconcile the non-GAAP financial measures in that press release to
the most directly comparable financial measures prepared in
accordance with GAAP. These non-GAAP financial measures Adjusted
EBITDA, Adjusted Net Income, Adjusted Operating Efficiency,
Adjusted Operating Expense, Adjusted Return on Equity and Adjusted
EPS.
The Company believes that the provision of these
non-GAAP financial measures can provide useful measures for
period-to-period comparisons of Oportun's core business and useful
information to investors and others in understanding and evaluating
its operating results. However, non-GAAP financial measures are not
calculated in accordance with GAAP and should not be considered as
a substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. These non-GAAP financial measures
do not reflect a comprehensive system of accounting, differ from
GAAP measures with the same names, and may differ from non-GAAP
financial measures with the same or similar names that are used by
other companies.
Adjusted EBITDA The Company
defines Adjusted EBITDA as net income, adjusted to eliminate the
effect of certain items as described below. The Company believes
that Adjusted EBITDA is an important measure because it allows
management, investors and its board of directors to evaluate and
compare operating results, including return on capital and
operating efficiencies, from period to period by making the
adjustments described below. In addition, it provides a useful
measure for period-to-period comparisons of Oportun's business, as
it removes the effect of income taxes, certain non-cash items,
variable charges and timing differences.
- The Company believes it is useful
to exclude the impact of income tax expense, as reported, because
historically it has included irregular income tax items that do not
reflect ongoing business operations.
- The Company believes it is useful
to exclude depreciation and amortization and stock-based
compensation expense because they are non-cash charges.
- The Company believes it is useful
to exclude the impact of interest expense associated with the
Company's Corporate Financing, as this expense is a function of its
capital structure.
- The Company excludes the impact of
certain non-recurring charges, such as expenses associated with a
litigation reserve, its retail network optimization plan,
impairment charges and acquisition and integration related
expenses, because it does not believe that these items reflect
ongoing business operations.
- The Company also reverses
origination fees for Loans Receivable at Fair Value, net. The
Company believes it is beneficial to exclude the uncollected
portion of such origination fees, because such amounts do not
represent cash received.
- The Company also reverses the fair
value mark-to-market adjustment because it is a non-cash
adjustment.
Adjusted Net IncomeThe Company
defines Adjusted Net Income as net income adjusted to eliminate the
effect of certain items as described below. The Company believes
that Adjusted Net Income is an important measure of operating
performance because it allows management, investors, and Oportun's
board of directors to evaluate and compare its operating results,
including return on capital and operating efficiencies, from period
to period, excluding the after-tax impact of non-cash, stock-based
compensation expense and certain non-recurring charges.
- The Company believes it is useful
to exclude the impact of income tax expense (benefit), as reported,
because historically it has included irregular income tax items
that do not reflect ongoing business operations. The Company also
includes the impact of normalized income tax expense by applying a
normalized statutory tax rate.
- The Company believes it is useful
to exclude the impact of certain non-recurring charges, such as
expenses associated with a litigation reserve, its retail network
optimization plan, impairment charges and acquisition and
integration related expenses, because it does not believe that
these items reflect its ongoing business operations.
- The Company believes it is useful
to exclude stock-based compensation expense because it is a
non-cash charge.
Adjusted Operating Efficiency and
Adjusted Operating ExpenseThe Company defines Adjusted
Operating Efficiency as Adjusted Operating Expense divided by total
revenue. The Company defines Adjusted Operating Expense as total
operating expenses adjusted to exclude stock-based compensation
expense and certain non-recurring charges, such as a litigation
reserve, retail network optimization expenses, impairment charges
and acquisition and integration related expenses. The Company
believes Adjusted Operating Efficiency is an important measure
because it allows management, investors and Oportun's board of
directors to evaluate how efficiently the Company is managing costs
relative to revenue. The Company believes Adjusted Operating
Expense is an important measure because it allows management,
investors and Oportun's board of directors to evaluate and compare
its operating costs from period to period, excluding the impact of
non-cash, stock-based compensation expense and certain
non-recurring charges.
Adjusted Return on EquityThe
Company defines Adjusted Return on Equity (“ROE”) as annualized
Adjusted Net Income divided by average stockholders’ equity.
Average stockholders’ equity is an average of the beginning and
ending stockholders’ equity balance for each period. The Company
believes Adjusted ROE is an important measure because it allows
management, investors and its board of directors to evaluate the
profitability of the business in relation to its stockholders'
equity and how efficiently it generates income from stockholders'
equity.
Adjusted EPSThe Company defines
Adjusted EPS as Adjusted Net Income divided by weighted average
diluted shares outstanding.
Oportun Financial
CorporationRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(in millions, unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
Adjusted EBITDA |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(6.5 |
) |
|
|
5.1 |
|
|
|
2.0 |
|
|
|
8.7 |
|
Interest on corporate financing |
|
|
0.9 |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
Depreciation and amortization |
|
|
9.2 |
|
|
|
5.7 |
|
|
|
25.3 |
|
|
|
17.0 |
|
Impairment |
|
|
108.5 |
|
|
|
— |
|
|
|
108.5 |
|
|
|
3.3 |
|
Stock-based compensation expense |
|
|
7.1 |
|
|
|
4.6 |
|
|
|
20.8 |
|
|
|
14.5 |
|
Litigation reserve |
|
|
— |
|
|
|
— |
|
|
|
2.8 |
|
|
|
— |
|
Retail network optimization expenses, net |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
1.9 |
|
|
|
12.8 |
|
Acquisition and integration related expenses |
|
|
8.1 |
|
|
|
— |
|
|
|
22.4 |
|
|
|
— |
|
Origination fees for Loans Receivable at Fair Value, net |
|
|
(6.3 |
) |
|
|
(5.9 |
) |
|
|
(17.7 |
) |
|
|
(9.1 |
) |
Fair value mark-to-market adjustment |
|
|
(21.4 |
) |
|
|
(14.6 |
) |
|
|
(74.1 |
) |
|
|
(57.2 |
) |
Adjusted
EBITDA |
|
$ |
(6.2 |
) |
|
$ |
18.1 |
|
|
$ |
23.3 |
|
|
$ |
23.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
Adjusted Net Income |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income
(loss) |
|
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(6.5 |
) |
|
|
5.1 |
|
|
|
2.0 |
|
|
|
8.7 |
|
Impairment |
|
|
108.5 |
|
|
|
— |
|
|
|
108.5 |
|
|
|
3.3 |
|
Stock-based compensation expense |
|
|
7.1 |
|
|
|
4.6 |
|
|
|
20.8 |
|
|
|
14.5 |
|
Litigation reserve |
|
|
— |
|
|
|
— |
|
|
|
2.8 |
|
|
|
— |
|
Retail network optimization expenses, net |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
1.9 |
|
|
|
12.8 |
|
Acquisition and integration related expenses |
|
|
8.1 |
|
|
|
— |
|
|
|
22.4 |
|
|
|
— |
|
Adjusted income before
taxes |
|
|
11.5 |
|
|
|
32.8 |
|
|
|
88.9 |
|
|
|
72.6 |
|
Normalized income tax expense |
|
|
3.1 |
|
|
|
9.0 |
|
|
|
24.0 |
|
|
|
19.9 |
|
Adjusted Net
Income |
|
$ |
8.4 |
|
|
$ |
23.8 |
|
|
$ |
64.9 |
|
|
$ |
52.7 |
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(in millions, unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
Adjusted Operating Efficiency |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Operating
Efficiency |
|
|
103.7 |
% |
|
|
70.0 |
% |
|
|
81.8 |
% |
|
|
75.8 |
% |
Total
Revenue |
|
$ |
250.1 |
|
|
$ |
159.1 |
|
|
$ |
690.6 |
|
|
$ |
432.7 |
|
|
|
|
|
|
|
|
|
|
Total Operating
Expense |
|
$ |
259.3 |
|
|
$ |
111.4 |
|
|
$ |
564.6 |
|
|
$ |
328.1 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Impairment |
|
|
(108.5 |
) |
|
|
— |
|
|
|
(108.5 |
) |
|
|
(3.3 |
) |
Stock-based compensation expense |
|
|
(7.1 |
) |
|
|
(4.6 |
) |
|
|
(20.8 |
) |
|
|
(14.5 |
) |
Litigation reserve |
|
|
— |
|
|
|
— |
|
|
|
(2.8 |
) |
|
|
— |
|
Retail network optimization expenses, net |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(1.9 |
) |
|
|
(12.8 |
) |
Acquisition and integration related expenses |
|
|
(8.1 |
) |
|
|
— |
|
|
|
(22.4 |
) |
|
|
— |
|
Total Adjusted
Operating Expense |
|
$ |
135.5 |
|
|
$ |
106.7 |
|
|
$ |
408.4 |
|
|
$ |
297.4 |
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Efficiency |
|
|
54.2 |
% |
|
|
67.1 |
% |
|
|
59.1 |
% |
|
|
68.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(in millions, except share and per share
data, unaudited)
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
GAAP Earnings per Share |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
|
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
Net income (loss) attributable
to common stockholders |
|
$ |
(105.8 |
) |
|
$ |
23.0 |
|
|
$ |
(69.3 |
) |
|
$ |
33.2 |
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common
shares outstanding |
|
|
33,010,107 |
|
|
|
28,167,686 |
|
|
|
32,688,988 |
|
|
|
27,982,273 |
|
Weighted average effect of
dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
1,451,687 |
|
|
|
— |
|
|
|
1,351,288 |
|
Restricted stock units |
|
|
— |
|
|
|
884,400 |
|
|
|
— |
|
|
|
726,114 |
|
Diluted weighted-average
common shares outstanding |
|
|
33,010,107 |
|
|
|
30,503,773 |
|
|
|
32,688,988 |
|
|
|
30,059,675 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(3.21 |
) |
|
$ |
0.82 |
|
|
$ |
(2.12 |
) |
|
$ |
1.19 |
|
Diluted |
|
$ |
(3.21 |
) |
|
$ |
0.75 |
|
|
$ |
(2.12 |
) |
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
Adjusted Earnings Per Share |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Diluted earnings (loss) per
share |
|
$ |
(3.21 |
) |
|
$ |
0.75 |
|
|
$ |
(2.12 |
) |
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
8.4 |
|
|
$ |
23.8 |
|
|
$ |
64.9 |
|
|
$ |
52.7 |
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common
shares outstanding |
|
|
33,010,107 |
|
|
|
28,167,686 |
|
|
|
32,688,988 |
|
|
|
27,982,273 |
|
Weighted average effect of
dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
72,714 |
|
|
|
1,451,687 |
|
|
|
326,702 |
|
|
|
1,351,288 |
|
Restricted stock units |
|
|
101,363 |
|
|
|
884,400 |
|
|
|
208,600 |
|
|
|
726,114 |
|
Diluted adjusted
weighted-average common shares outstanding |
|
|
33,184,184 |
|
|
|
30,503,773 |
|
|
|
33,224,290 |
|
|
|
30,059,675 |
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per
Share |
|
$ |
0.25 |
|
|
$ |
0.78 |
|
|
$ |
1.95 |
|
|
$ |
1.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
Oportun Financial
CorporationRECONCILIATION OF FORWARD LOOKING
NON-GAAP FINANCIAL MEASURES(in millions, except
share and per share data, unaudited)
|
|
4Q 2022 |
|
FY 2022 |
|
|
Low |
|
High |
|
Low |
|
High |
Adjusted Net
Income |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1.4 |
) |
|
$ |
0.1 |
|
|
$ |
(71.4 |
) |
|
|
(69.9 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(0.5 |
) |
|
|
— |
|
|
|
1.2 |
|
|
|
1.7 |
|
Impairment |
|
|
— |
|
|
|
— |
|
|
|
108.5 |
|
|
|
108.5 |
|
Stock-based compensation expense |
|
|
6.7 |
|
|
|
7.2 |
|
|
|
27.4 |
|
|
|
28.0 |
|
Litigation reserve |
|
|
— |
|
|
|
— |
|
|
|
2.8 |
|
|
|
2.8 |
|
Acquisition and integration related expenses |
|
|
6.2 |
|
|
|
6.4 |
|
|
|
29.8 |
|
|
|
29.9 |
|
Retail network optimization expenses, net |
|
|
— |
|
|
|
— |
|
|
|
1.7 |
|
|
|
1.7 |
|
Adjusted income (loss)
before taxes |
|
|
11.0 |
|
|
|
13.7 |
|
|
|
100.0 |
|
|
|
102.7 |
|
Normalized income tax expense (benefit) |
|
|
3.0 |
|
|
|
3.7 |
|
|
|
27.0 |
|
|
|
27.7 |
|
Adjusted Net Income
(loss) (1) |
|
$ |
8.0 |
|
|
$ |
10.0 |
|
|
$ |
73.0 |
|
|
$ |
75.0 |
|
Forecasted diluted weighted-average shares outstanding used to
calculate Adjusted EPS |
|
|
33.4 |
|
|
|
33.4 |
|
|
|
33.3 |
|
|
|
33.3 |
|
Adjusted
EPS |
|
$ |
0.24 |
|
|
$ |
0.30 |
|
|
$ |
2.19 |
|
|
$ |
2.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not foot or cross-foot due to
rounding.
(1) Management's guidance assumes the
following:
With respect to 4Q 2022 and FY 2022, for loans
which are projected to have a weighted average life of 0.94 years,
the Company is assuming a December 31, 2022 interpolated benchmark
rate of 4.61%, based on the forward rates from October 11, 2022.
For notes which have original terms of 1 to 3 years, the Company
interpolated between the forward benchmark rates. The Company is
assuming a December 31, 2022 interpolated benchmark rate of 4.44%,
based on the forward rates from October 11, 2022.
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