Oportun Financial (OPRT) Sidoti Small-Cap Virtual Investor Conference summary

Business overview and product strategy

• Offers unsecured and secured personal loans, plus an award-winning automated savings product, targeting underserved, low-to-moderate income individuals, with a bilingual approach and multiple digital and physical channels.

• Unsecured loans average $3,000 at 33.9% APR over 41 months; secured loans average $7,000 at 30.7% APR over 51 months, with lower losses and higher revenue per loan.

• APRs are capped at 36%, making products significantly less expensive than payday alternatives; $2.4 billion saved for members since inception.

• Savings product, Set & Save, uses AI to automate transfers, helping members save $1,800/year on average, with $11 billion saved in total.

• 49% of applicants use multiple channels; 74% use digital or mobile for applications; payments accepted at tens of thousands of partner locations.

Financial performance and credit quality

• Q3 2023 total revenue was $250 million, down 7% year-over-year, mainly due to a conservative credit posture and lower average principal balances.

• Net revenue was $63 million, down 26% year-over-year; Adjusted Net Income was $1 million, a $13 million improvement, driven by cost reductions.

• Adjusted EBITDA for Q3 was $31 million, up 117% year-over-year, exceeding guidance due to lower charge-offs.

• Q3 annualized net charge-off rate was 11.9%, 26 basis points better than guidance; 30+ day delinquencies declined to 5.2%.

• Front Book loans (originated after July 2022) show losses 400 basis points lower than Back Book, with Q3 vintage at lowest loss levels.

Strategic priorities and operational discipline

• Strategic focus for 2024: improving credit outcomes, fortifying business economics, and prioritizing high-quality originations.

• Multiple credit tightenings since July 2022 have improved loss rates and credit performance.

• Q3 originations were $480 million, up 10% sequentially and flat year-over-year; Q4 originations expected to grow 10% year-over-year, with 2025 originations to exceed 2024.

• Operating expenses targeted at $97.5 million for Q4, a 38% reduction from Q2 2022; ongoing cost discipline supports improved Adjusted ROE.

• Long-term ROE target is 20%-28%, with Q3 showing an 11 percentage point year-over-year improvement in Adjusted ROE.