Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun”, or the
"Company") today reported financial results for the third quarter
ended September 30, 2023.
"Oportun's performance reflected record revenue
and our lowest quarterly operating expenses in two years," said
Raul Vazquez, CEO of Oportun. "Our top-line remained resilient,
growing 7% despite originations declining by 24%, as we prioritized
quality over quantity of loans, while our operating expenses
declined markedly year-over-year and 10% sequentially. That being
said, I'm disappointed that the impact of fair value adjustments
and higher interest expense caused us to fall short of our Adjusted
EBITDA expectations. We are taking additional decisive actions to
substantially enhance shareholder returns, including further cost
reductions intended to achieve $105 million in quarterly run rate
expenses by the end of 2024. We are also streamlining our product
suite by exploring strategic options relating to our credit card
portfolio and sunsetting our embedded finance partnership with
Sezzle, as well as our investing and retirement products. Backed by
two new personal loan financing agreements with primary funding
partners totaling up to $267 million, we're well positioned for
profitable, sustainable growth in service of our members."
Third Quarter 2023
Results
Metric |
GAAP |
|
Adjusted1 |
|
3Q23 |
3Q22 |
|
3Q23 |
3Q22 |
Total revenue |
$ |
268 |
|
$ |
250 |
|
|
|
|
Net income (loss) |
$ |
(21 |
) |
$ |
(106 |
) |
|
($ |
18 |
) |
$ |
8.4 |
|
Diluted EPS |
$ |
(0.55 |
) |
$ |
(3.21 |
) |
|
$ |
(0.46 |
) |
$ |
0.25 |
|
Adjusted EBITDA |
|
|
|
$ |
16 |
|
$ |
(6.2 |
) |
Dollars in millions, except per share amounts. |
|
|
|
|
|
Business
Highlights
- Members were 2.1 million, an
increase of 13% compared to the prior-year quarter
- Products were 2.3 million, an
increase of 14% compared to the prior-year quarter
- Aggregate Originations were $483M,
down 24% compared to the prior-year quarter
- Managed Principal Balance at End of
Period was $3.23B, down 4% compared to the prior-year quarter
- Annualized Net Charge-Off Rate of
11.8% as compared to 9.8% for the prior-year quarter and 12.5% in
the prior quarter
- 30+ Day
Delinquency Rate of 5.5% as compared to 5.4% for the prior-year
quarter
|
|
|
|
|
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. |
Financial and Operating
Results
All figures are as of or for the quarter ended
September 30, 2023, unless otherwise noted.
Operational Drivers
Members – Members as of the end
of the third quarter grew to 2.1 million, up 13% from 1.9 million
as of the end of the prior-year quarter.
Products – Products as of the
end of the third quarter grew to 2.3 million, up 14% from 2.0
million as of the end of the prior-year quarter.
Originations – Aggregate
Originations for the third quarter were $483 million, a decrease of
24% as compared to $634 million in the prior-year quarter. The
decrease was primarily driven by fewer loans originated due to the
Company tightening its credit underwriting standards and focusing
lending toward existing and returning members to improve credit
outcomes.
Financial Results
Revenue – Total revenue for the
third quarter was $268 million, an increase of 7% as compared to
$250 million in the prior-year quarter. The increase was
primarily attributable to higher interest income due to growth in
the Company's Average Daily Principal Balance and higher portfolio
yield, along with non-interest income associated with the Savings
product. Net revenue for the third quarter was $85 million, a
decrease of 42% as compared to net revenue of $147 million in the
prior-year quarter. Net revenue declined from the prior-year
quarter due to increased interest expense and less favorable net
change in fair value, which includes the impact of higher
charge-offs, partially offset by increased revenue.
Operating Expense and Adjusted Operating
Expense – For the third quarter, total operating expense
was $123 million, a decrease of 53% as compared to $259 million in
the prior-year quarter. The decrease is attributable to the $108
million goodwill impairment charge in the prior-year quarter and a
combined set of initiatives announced in February and May
anticipated to deliver $126 to $136 million in annualized expense
savings. Adjusted Operating Expense, which excludes stock-based
compensation expense and certain non-recurring charges, decreased
19% year-over-year to $110 million.
Net Income (Loss) and Adjusted Net
Income (Loss) – Net loss was $21 million as compared to a
net loss of $106 million in the prior-year quarter. The increase in
net income is attributable to the goodwill impairment charge in the
prior-year quarter and a combined set of initiatives in February
and May anticipated to deliver $126 to $136 million in annualized
expense savings. Adjusted Net Loss was $18 million as compared to
Adjusted Net Income of $8.4 million in the prior-year quarter.
The decrease in Adjusted Net Income is attributable to decreased
net revenue, partially offset by lower operating expenses.
Earnings (Loss) Per Share and Adjusted
EPS – GAAP net loss per share, basic and diluted, were
both $0.55 for the three months ended September 30, 2023. GAAP net
loss per share, basic and diluted, were both $3.21 in the
prior-year quarter. Adjusted Earnings Per Share was $(0.46) as
compared to $0.25 in the prior-year quarter.
Adjusted EBITDA – Adjusted
EBITDA was $16 million, up from a $6.2 million loss in the
prior-year quarter.
Credit and Operating
Metrics
Net Charge-Off Rate – The
Annualized Net Charge-Off Rate for the quarter was 11.8%, compared
to 9.8% for the prior-year quarter.
30+ Day Delinquency Rate – The
Company's 30+ Day Delinquency Rate was 5.5% at the end of the
quarter, compared to 5.4% at the end of the prior-year quarter and
5.3% in prior-quarter. 30+ Day Delinquency Rates are presented on
page 8 of the Company's Earnings Presentation available at
investor.oportun.com.
Operating Efficiency and Adjusted
Operating Efficiency – Operating Efficiency for the
quarter was 46% as compared to 104% in the prior-year
quarter. Adjusted Operating Efficiency for the third quarter
was 41%, as compared to 54% in the prior-year quarter. Adjusted
Operating Efficiency excludes stock-based compensation expense and
certain non-recurring charges, such as the Company's workforce
optimization expenses, and acquisition and integration related
expenses. The improvement in Operating Efficiency is primarily
attributable to the goodwill impairment charge in the prior-year
quarter. Adjusted Operating Efficiency reflects the Company growing
its revenue while exercising strong expense discipline to reduce
operating expenses.
Return On Equity ("ROE") and Adjusted
ROE – ROE for the quarter was (19)%, as compared to
(70)% in the prior-year quarter. The improvement is attributable to
the goodwill impairment charge in the prior-year quarter. Adjusted
ROE for the quarter was (16)%, as compared to 5.6% in the
prior-year quarter.
Other Products
Secured personal loans – As of September 30,
2023, the Company had a secured personal loan receivables balance
of $124 million, up 6% from $116 million at the end of the third
quarter 2022.
Credit card receivables – As of September 30,
2023, the Company had a credit card receivables balance of $117
million, down 10% from $131 million at the end of the third quarter
2022.
Funding and Liquidity
As of September 30, 2023, total cash was $200
million, consisting of cash and cash equivalents of $82 million and
restricted cash of $118 million. Cost of Debt and Debt-to-Equity
were 6.8% and 6.6x, respectively, for and at the end of the third
quarter 2023 as compared to 3.9% and 5.2x, respectively, for and at
the end of the prior-year quarter. As of September 30, 2023, the
Company had $247 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, 2023, the Company had $48 million of undrawn capacity on its
existing $120 million credit card warehouse line. The Company's
credit card warehouse line is committed through December 2024.
On October 20, 2023, the Company borrowed $197
million under a new private structured financing facility with
Castlelake, its affiliates and other investors. The facility has a
two-year revolving period.
On November 2, 2023, the Company entered into a
forward flow whole loan sale agreement with an institutional
investor. Pursuant to the agreement, the Company is expected to
sell up to $70 million of its unsecured personal loan
originations for an initial term of twelve months.
Financial Outlook
for Fourth
Quarter and Full
Year 2023
Oportun is providing the following guidance for
4Q 2023 and full year 2023 as follows:
|
4Q 2023 |
|
Full Year 2023 |
Total Revenue |
$260 - $265 M |
|
$1,054 - $1,059 M |
Annualized Net Charge-Off Rate |
12.3% +/- 15 bps |
|
12.2% +/- 10 bps |
Adjusted EBITDA |
$5 - $10 M |
|
$0.5 - $5.5 M |
Conference Call
As previously announced, Oportun’s management
will host a conference call to discuss third quarter 2023 results
at 5:00 p.m. ET (2:00 p.m. PT) today. A live webcast of the
call will be accessible from the Investor Relations page of
Oportun's website at https://investor.oportun.com. The dial-in
number for the conference call is 1-866-604-1698 (toll-free) or
1-201-389-0844 (international). Participants should call in 10
minutes prior to the scheduled start time. 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, Adjusted Operating Expense
and Adjusted Return on Equity ("ROE"), 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 a mission-driven
fintech that puts its 2.1 million members' financial goals within
reach. With intelligent borrowing, savings, and budgeting
capabilities, Oportun empowers members with the confidence to build
a better financial future. Since inception, Oportun has provided
more than $17.2 billion in responsible and affordable credit, saved
its members more than $2.4 billion in interest and fees, and helped
its members save an average of more than $1,800 annually. For more
information, visit Oportun.com.
Forward-Looking Statements
This press release contains forward-looking
statements. 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. All statements other than statements of historical fact
contained in this press release, including statements as to future
performance, results of operations and financial position;
statements related to the effectiveness of the Company’s cost
reduction measures and the impacts on the Company's business; the
anticipated size, timing and effectiveness of operational
efficiencies; strategic options regarding our credit card
portfolio; our planned products and services; the ability to access
diverse sources of capital; the Company's expectations regarding
the sale of certain personal loan originations; achievement of the
Company's strategic priorities and goals; the Company's
expectations regarding macroeconomic conditions; the Company's
profitability and future growth opportunities; the Company's
expectations regarding the effect of tightening its underwriting
standards on credit outcomes and the effect of fair value
mark-to-market adjustments on its loan portfolio and asset-backed
notes; the Company's fourth quarter and full year 2023 outlook; and
the Company's expectations related to future profitability on an
adjusted basis, are 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 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. Oportun has based these
forward-looking statements on its current expectations and
projections about future events, financial trends and risks and
uncertainties 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, Oportun's ability to
retain existing members and attract new members; Oportun's ability
to accurately predict demand for, and develop, new and commercially
viable financial products and services; the effectiveness of
Oportun's A.I. model; macroeconomic conditions, including rising
inflation and market interest rates; increases in loan
non-payments, delinquencies and charge-offs; Oportun's ability to
increase market share and enter into new markets; 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; Oportun’s ability to compete successfully with
other companies that are currently in, or may in the future enter,
its industry; changes in Oportun's ability to obtain additional
financing on acceptable terms or at all; and Oportun's potential
need to seek additional strategic alternatives, including
restructuring or refinancing its debt, seeking additional debt or
equity capital, or reducing or delaying its business activities.
These forward-looking statements speak only as of the date on which
they are made and, except to the extent required by federal
securities laws, 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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
|
Interest income |
|
$ |
243.3 |
|
|
$ |
232.1 |
|
|
$ |
721.3 |
|
|
$ |
632.0 |
|
Non-interest income |
|
|
25.0 |
|
|
|
18.0 |
|
|
|
73.0 |
|
|
|
58.6 |
|
Total revenue |
|
|
268.2 |
|
|
|
250.1 |
|
|
|
794.3 |
|
|
|
690.6 |
|
Less: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
47.0 |
|
|
|
26.7 |
|
|
|
127.4 |
|
|
|
57.5 |
|
Net decrease in fair value |
|
|
(136.1 |
) |
|
|
(76.4 |
) |
|
|
(458.3 |
) |
|
|
(135.9 |
) |
Net revenue |
|
|
85.1 |
|
|
|
147.0 |
|
|
|
208.6 |
|
|
|
497.2 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Technology and facilities |
|
|
52.7 |
|
|
|
56.1 |
|
|
|
164.7 |
|
|
|
158.1 |
|
Sales and marketing |
|
|
18.9 |
|
|
|
21.8 |
|
|
|
57.2 |
|
|
|
88.7 |
|
Personnel |
|
|
28.6 |
|
|
|
40.0 |
|
|
|
96.7 |
|
|
|
114.5 |
|
Outsourcing and professional fees |
|
|
10.5 |
|
|
|
18.6 |
|
|
|
34.2 |
|
|
|
50.1 |
|
General, administrative and other |
|
|
11.9 |
|
|
|
14.4 |
|
|
|
52.1 |
|
|
|
44.7 |
|
Goodwill impairment |
|
|
— |
|
|
|
108.5 |
|
|
|
— |
|
|
|
108.5 |
|
Total operating expenses |
|
|
122.5 |
|
|
|
259.3 |
|
|
|
404.9 |
|
|
|
564.6 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes |
|
|
(37.4 |
) |
|
|
(112.4 |
) |
|
|
(196.4 |
) |
|
|
(67.4 |
) |
Income tax expense (benefit) |
|
|
(16.2 |
) |
|
|
(6.5 |
) |
|
|
(58.2 |
) |
|
|
2.0 |
|
Net loss |
|
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss) per Common Share |
|
$ |
(0.55 |
) |
|
$ |
(3.21 |
) |
|
$ |
(3.80 |
) |
|
$ |
(2.12 |
) |
Diluted Weighted Average Common Shares |
|
|
38,283,071 |
|
|
|
33,010,107 |
|
|
|
36,333,570 |
|
|
|
32,688,988 |
|
Note: Numbers may not foot or cross-foot
due to rounding.
Oportun Financial CorporationCONDENSED
CONSOLIDATED BALANCE SHEETS (in millions,
unaudited) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
81.9 |
|
|
$ |
98.8 |
|
Restricted cash |
|
|
117.8 |
|
|
|
105.0 |
|
Loans receivable at fair value |
|
|
2,940.9 |
|
|
|
3,143.7 |
|
Interest and fees receivable, net |
|
|
29.0 |
|
|
|
31.8 |
|
Capitalized software and other intangibles |
|
|
127.3 |
|
|
|
139.8 |
|
Right of use assets - operating |
|
|
23.2 |
|
|
|
30.4 |
|
Other assets |
|
|
109.9 |
|
|
|
64.2 |
|
Total assets |
|
$ |
3,429.9 |
|
|
$ |
3,613.7 |
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
Liabilities |
|
|
|
|
Secured financing |
|
$ |
423.2 |
|
|
$ |
317.6 |
|
Asset-backed notes at fair value |
|
|
1,958.3 |
|
|
|
2,387.7 |
|
Asset-backed borrowings at amortized cost |
|
|
244.4 |
|
|
|
— |
|
Acquisition and corporate financing |
|
|
268.1 |
|
|
|
222.9 |
|
Lease liabilities |
|
|
30.9 |
|
|
|
37.9 |
|
Other liabilities |
|
|
63.7 |
|
|
|
100.0 |
|
Total liabilities |
|
|
2,988.6 |
|
|
|
3,066.1 |
|
Stockholders' equity |
|
|
|
|
Common stock |
|
|
— |
|
|
|
— |
|
Common stock, additional paid-in capital |
|
|
579.7 |
|
|
|
547.8 |
|
Retained earnings (accumulated deficit) |
|
|
(132.0 |
) |
|
|
6.1 |
|
Treasury stock |
|
|
(6.3 |
) |
|
|
(6.3 |
) |
Total stockholders’ equity |
|
|
441.4 |
|
|
|
547.6 |
|
Total liabilities and stockholders' equity |
|
$ |
3,429.9 |
|
|
$ |
3,613.7 |
|
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, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Net loss |
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
Adjustments for non-cash items |
|
138.2 |
|
|
|
209.3 |
|
|
|
446.3 |
|
|
|
308.6 |
|
Proceeds from sale of loans in excess of originations of loans sold
and held for sale |
|
2.1 |
|
|
|
0.1 |
|
|
|
5.6 |
|
|
|
6.2 |
|
Changes in balances of operating assets and liabilities |
|
(12.1 |
) |
|
|
(35.9 |
) |
|
|
(27.3 |
) |
|
|
(86.1 |
) |
Net cash provided by operating activities |
|
107.1 |
|
|
|
67.7 |
|
|
|
286.5 |
|
|
|
159.3 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Net loan principal repayments (loan originations) |
|
(79.8 |
) |
|
|
(264.0 |
) |
|
|
(165.7 |
) |
|
|
(1,123.6 |
) |
Proceeds from loan sales originated as held for investment |
|
1.1 |
|
|
|
0.7 |
|
|
|
2.8 |
|
|
|
247.9 |
|
Capitalization of system development costs |
|
(6.4 |
) |
|
|
(13.2 |
) |
|
|
(25.2 |
) |
|
|
(36.8 |
) |
Other, net |
|
(0.2 |
) |
|
|
(1.3 |
) |
|
|
(1.2 |
) |
|
|
(3.4 |
) |
Net cash used in investing activities |
|
(85.3 |
) |
|
|
(277.9 |
) |
|
|
(189.4 |
) |
|
|
(915.9 |
) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Borrowings |
|
245.9 |
|
|
|
918.8 |
|
|
|
516.1 |
|
|
|
2,654.8 |
|
Repayments |
|
(269.7 |
) |
|
|
(569.4 |
) |
|
|
(615.0 |
) |
|
|
(1,810.8 |
) |
Net stock-based activities |
|
(0.6 |
) |
|
|
(0.9 |
) |
|
|
(2.3 |
) |
|
|
(8.2 |
) |
Net cash provided by (used in) financing
activities |
|
(24.4 |
) |
|
|
348.5 |
|
|
|
(101.3 |
) |
|
|
835.8 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents and
restricted cash |
|
(2.7 |
) |
|
|
138.4 |
|
|
|
(4.2 |
) |
|
|
79.2 |
|
Cash and cash equivalents and restricted cash beginning of
period |
|
202.3 |
|
|
|
133.9 |
|
|
|
203.8 |
|
|
|
193.0 |
|
Cash and cash equivalents and restricted cash end of period |
$ |
199.6 |
|
|
$ |
272.2 |
|
|
$ |
199.6 |
|
|
$ |
272.2 |
|
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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Members (Actuals) |
|
|
2,098,172 |
|
|
|
1,858,335 |
|
|
|
2,098,172 |
|
|
|
1,858,335 |
|
Products (Actuals) |
|
|
2,259,464 |
|
|
|
1,981,310 |
|
|
|
2,259,464 |
|
|
|
1,981,310 |
|
Aggregate Originations (Millions) |
|
$ |
482.7 |
|
|
$ |
634.2 |
|
|
$ |
1,375.8 |
|
|
$ |
2,312.5 |
|
30+ Day Delinquency Rate (%) |
|
|
5.5 |
% |
|
|
5.4 |
% |
|
|
5.5 |
% |
|
|
5.4 |
% |
Annualized Net Charge-Off Rate (%) |
|
|
11.8 |
% |
|
|
9.8 |
% |
|
|
12.1 |
% |
|
|
9.0 |
% |
Return on Equity (%) |
|
(18.6 |
)% |
|
(70.1 |
)% |
|
(37.3 |
)% |
|
(16.1 |
)% |
Adjusted Return on Equity (%) |
|
(15.5 |
)% |
|
|
5.6 |
% |
|
(28.0 |
)% |
|
|
15.0 |
% |
Oportun Financial CorporationOTHER
METRICS(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Managed Principal Balance at End of Period (Millions) |
|
$ |
3,231.0 |
|
$ |
3,351.5 |
|
$ |
3,231.0 |
|
$ |
3,351.5 |
Owned Principal Balance at End of Period (Millions) |
|
$ |
2,927.9 |
|
$ |
2,969.7 |
|
$ |
2,927.9 |
|
$ |
2,969.7 |
Average Daily Principal Balance (Millions) |
|
$ |
2,967.7 |
|
$ |
2,903.9 |
|
$ |
3,010.1 |
|
$ |
2,633.2 |
Note: Numbers may not foot or cross-foot
due to rounding.
Oportun Financial CorporationABOUT NON-GAAP
FINANCIAL MEASURES(unaudited) |
|
This press release dated November 6, 2023
contains non-GAAP financial measures. The following tables
reconcile the non-GAAP financial measures in this press release to
the most directly comparable financial measures prepared in
accordance with GAAP.
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 facilities, as it
views this expense as related to its capital structure rather than
its funding.
- The Company
excludes the impact of certain non-recurring charges, such as
expenses associated with our workforce optimization, acquisition
and integration related expenses and other non-recurring charges
because it does not believe that these items reflect ongoing
business operations. Other non-recurring charges include litigation
reserve, impairment charges, debt amendment and warrant
amortization costs related to our corporate financing
facilities.
- 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 The
Company'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 our
workforce optimization, acquisition and integration related
expenses and other non-recurring charges because it does not
believe that these items reflect its ongoing business operations.
Other non-recurring charges include litigation reserve, impairment
charges, debt amendment and warrant amortization costs related to
our Corporate Financing facility.
- 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 expenses
associated with our workforce optimization, acquisition and
integration related expenses and other non-recurring charges. Other
non-recurring charges include litigation reserve, impairment
charges, and debt amendment costs related to our Corporate
Financing facility. 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 |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
|
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(16.2 |
) |
|
|
(6.5 |
) |
|
|
(58.2 |
) |
|
|
2.0 |
|
Interest on corporate financing (1) |
|
|
11.5 |
|
|
|
0.9 |
|
|
|
26.5 |
|
|
|
0.9 |
|
Depreciation and amortization |
|
|
11.0 |
|
|
|
9.2 |
|
|
|
32.2 |
|
|
|
25.3 |
|
Stock-based compensation expense |
|
|
4.3 |
|
|
|
7.1 |
|
|
|
13.2 |
|
|
|
20.8 |
|
Workforce optimization expenses |
|
|
0.5 |
|
|
|
0.2 |
|
|
|
15.7 |
|
|
|
1.9 |
|
Acquisition and integration related expenses |
|
|
6.9 |
|
|
|
8.1 |
|
|
|
21.0 |
|
|
|
22.4 |
|
Other non-recurring charges (1) |
|
|
1.6 |
|
|
|
108.5 |
|
|
|
4.7 |
|
|
|
111.2 |
|
Origination fees for Loans Receivable at Fair Value, net |
|
|
0.8 |
|
|
|
(6.3 |
) |
|
|
(14.5 |
) |
|
|
(17.7 |
) |
Fair value mark-to-market adjustment |
|
|
16.5 |
|
|
|
(21.4 |
) |
|
|
93.2 |
|
|
|
(74.1 |
) |
Adjusted EBITDA |
|
$ |
15.6 |
|
|
$ |
(6.2 |
) |
|
$ |
(4.5 |
) |
|
$ |
23.3 |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
Adjusted Net Income |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
|
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(16.2 |
) |
|
|
(6.5 |
) |
|
|
(58.2 |
) |
|
|
2.0 |
|
Stock-based compensation expense |
|
|
4.3 |
|
|
|
7.1 |
|
|
|
13.2 |
|
|
|
20.8 |
|
Workforce optimization expenses |
|
|
0.5 |
|
|
|
0.2 |
|
|
|
15.7 |
|
|
|
1.9 |
|
Acquisition and integration related expenses |
|
|
6.9 |
|
|
|
8.1 |
|
|
|
21.0 |
|
|
|
22.4 |
|
Other non-recurring charges (1) |
|
|
1.6 |
|
|
|
108.5 |
|
|
|
4.7 |
|
|
|
111.2 |
|
Adjusted income before taxes |
|
|
(24.1 |
) |
|
|
11.5 |
|
|
|
(141.8 |
) |
|
|
88.9 |
|
Normalized income tax expense |
|
|
(6.5 |
) |
|
|
3.1 |
|
|
|
(38.3 |
) |
|
|
24.0 |
|
Adjusted Net Income |
|
$ |
(17.6 |
) |
|
$ |
8.4 |
|
|
$ |
(103.5 |
) |
|
$ |
64.9 |
|
Note: Numbers may not foot or cross-foot
due to rounding.(1) Certain prior-period financial
information has been reclassified to conform to current period
presentation.
Oportun Financial CorporationRECONCILIATION OF
NON-GAAP FINANCIAL MEASURES(in millions,
unaudited) |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
Adjusted Operating Efficiency |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating Efficiency |
|
|
45.7 |
% |
|
|
103.7 |
% |
|
|
51.0 |
% |
|
|
81.8 |
% |
Total Revenue |
|
$ |
268.2 |
|
|
$ |
250.1 |
|
|
$ |
794.3 |
|
|
$ |
690.6 |
|
|
|
|
|
|
|
|
|
|
Total Operating Expense |
|
$ |
122.5 |
|
|
$ |
259.3 |
|
|
$ |
404.9 |
|
|
$ |
564.6 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(4.3 |
) |
|
|
(7.1 |
) |
|
|
(13.2 |
) |
|
|
(20.8 |
) |
Workforce optimization expenses |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(15.7 |
) |
|
|
(1.9 |
) |
Acquisition and integration related expenses |
|
|
(6.9 |
) |
|
|
(8.1 |
) |
|
|
(21.0 |
) |
|
|
(22.4 |
) |
Other non-recurring charges (1) |
|
|
(1.3 |
) |
|
|
(108.5 |
) |
|
|
(3.9 |
) |
|
|
(111.2 |
) |
Total Adjusted Operating Expense |
|
$ |
109.6 |
|
|
$ |
135.5 |
|
|
$ |
351.1 |
|
|
$ |
408.4 |
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Efficiency |
|
|
40.8 |
% |
|
|
54.2 |
% |
|
|
44.2 |
% |
|
|
59.1 |
% |
Note: Numbers may not foot or cross-foot
due to rounding.(1) Certain prior-period financial
information has been reclassified to conform to current period
presentation.
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 (loss) per Share |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
|
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
Net income (loss) attributable to common stockholders |
|
$ |
(21.1 |
) |
|
$ |
(105.8 |
) |
|
$ |
(138.1 |
) |
|
$ |
(69.3 |
) |
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding |
|
|
38,283,071 |
|
|
|
33,010,107 |
|
|
|
36,333,570 |
|
|
|
32,688,988 |
|
Weighted average effect of dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Diluted weighted-average common shares outstanding |
|
|
38,283,071 |
|
|
|
33,010,107 |
|
|
|
36,333,570 |
|
|
|
32,688,988 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.55 |
) |
|
$ |
(3.21 |
) |
|
$ |
(3.80 |
) |
|
$ |
(2.12 |
) |
Diluted |
|
$ |
(0.55 |
) |
|
$ |
(3.21 |
) |
|
$ |
(3.80 |
) |
|
$ |
(2.12 |
) |
|
|
Three Months EndedSeptember
30, |
|
Nine Months
EndedSeptember 30, |
Adjusted Earnings (loss) Per Share |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Diluted earnings (loss) per share |
|
$ |
(0.55 |
) |
|
$ |
(3.21 |
) |
|
$ |
(3.80 |
) |
|
$ |
(2.12 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
(17.6 |
) |
|
$ |
8.4 |
|
|
$ |
(103.5 |
) |
|
$ |
64.9 |
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding |
|
|
38,283,071 |
|
|
|
33,010,107 |
|
|
|
36,333,570 |
|
|
|
32,688,988 |
|
Weighted average effect of dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
— |
|
|
|
72,714 |
|
|
|
— |
|
|
|
326,702 |
|
Restricted stock units |
|
|
— |
|
|
|
101,363 |
|
|
|
— |
|
|
|
208,600 |
|
Diluted adjusted weighted-average common shares outstanding |
|
|
38,283,071 |
|
|
|
33,184,184 |
|
|
|
36,333,570 |
|
|
|
33,224,290 |
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (loss) Per Share |
|
$ |
(0.46 |
) |
|
$ |
0.25 |
|
|
$ |
(2.85 |
) |
|
$ |
1.95 |
|
Note: Numbers may not foot or cross-foot
due to rounding.
Oportun Financial CorporationRECONCILIATION OF
FORWARD LOOKING NON-GAAP FINANCIAL MEASURES(in millions,
unaudited) |
|
|
|
4Q 2023 |
|
FY 2023 |
|
|
|
Low |
|
High |
|
Low |
|
High |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Net (loss)* |
|
$ |
(25.4 |
) |
* |
$ |
(21.8 |
) |
* |
$ |
(95.6 |
) |
* |
$ |
(91.9 |
) |
* |
Adjustments: |
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(7.3 |
) |
|
|
(5.9 |
) |
|
|
(40.3 |
) |
|
|
(39.0 |
) |
|
Interest on corporate financing |
|
|
11.5 |
|
|
|
11.5 |
|
|
|
38.3 |
|
|
|
38.3 |
|
|
Depreciation and amortization |
|
|
11.2 |
|
|
|
11.2 |
|
|
|
42.4 |
|
|
|
42.4 |
|
|
Stock-based compensation expense |
|
|
5.7 |
|
|
|
5.7 |
|
|
|
19.8 |
|
|
|
19.8 |
|
|
Workforce optimization expenses |
|
|
7.3 |
|
|
|
7.3 |
|
|
|
23.0 |
|
|
|
23.0 |
|
|
Acquisition and integration related expenses |
|
|
7.3 |
|
|
|
7.3 |
|
|
|
28.4 |
|
|
|
28.4 |
|
|
Origination fees for loans receivable at fair value, net |
|
|
(8.2 |
) |
|
|
(8.2 |
) |
|
|
(22.7 |
) |
|
|
(22.7 |
) |
|
Other non-recurring charges |
|
|
2.9 |
|
|
|
2.9 |
|
|
|
7.2 |
|
|
|
7.2 |
|
|
Fair value mark-to-market adjustment* |
|
* |
|
* |
|
* |
|
* |
|
Adjusted EBITDA |
|
$ |
5.0 |
|
|
$ |
10.0 |
|
|
$ |
0.5 |
|
|
$ |
5.5 |
|
|
|
|
|
|
|
|
|
|
|
|
* Due to the uncertainty in macroeconomic
conditions, we are unable to precisely forecast the fair value
mark-to-market adjustments on our loan portfolio and asset-backed
notes. As a result, while we fully expect there to be a fair value
mark-to-market adjustment which could have an impact on GAAP net
income (loss), the net income (loss) number shown above assumes no
change in the fair value mark-to-market adjustment.
Note: Numbers may not foot or cross-foot
due to rounding.
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