Met or outperformed each guidance metric
Total operating expenses declined 17% year-over-year
Credit card portfolio sale complete
Corporate debt refinancing expected to close on November 14th
"I'm pleased that our third quarter results met or exceeded our expectations on each of our guidance metrics," said Raul Vazquez, CEO of Oportun. "We generated total revenue of $250 million, while our Annualized Net Charge-Off Rate declined 40 basis points sequentially to 11.9% as we reported lower year-over-year dollar net charge-offs for the fourth consecutive quarter. In addition, we narrowed our GAAP net loss sequentially while being Adjusted Net Income profitable for the third consecutive quarter this year, and more than doubled our Adjusted EBITDA year-over-year by generating $31 million, exceeding the top of our guidance range by 21%. We're now well positioned to responsibly resume originations growth while further enhancing our profitability year-over-year and finishing strong in the fourth quarter of 2024. This will provide momentum going into 2025, towards our preliminary expectations for full year GAAP profitability of $0.25 to $0.50 Diluted EPS, generating $1.00 to $1.25 of Adjusted EPS, and continuing to improve upon our credit performance."
Third Quarter 2024 Results
| Metric | GAAP | Adjusted1 | |||||||
| 3Q24 | 3Q23 | 3Q24 | 3Q232 | ||||||
| Total revenue | $250 | $268 | |||||||
| Net income (loss) | $(30) | $(21) | $0.9 | $(12) | |||||
| Diluted EPS | $(0.75) | $(0.55) | $0.02 | $(0.31) | |||||
| Adjusted EBITDA | $31 | $14 | |||||||
| Dollars in millions, except per share amounts. | |||||||||
| 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 1Q24, we updated our calculations of Adjusted EBITDA and Adjusted Net Income (Loss). Prior periods presented here have been updated to reflect the prior period numbers on a comparable basis. See Appendix for non-GAAP reconciliation to the most comparable GAAP measure. | |||||||||
- Aggregate Originations were $480 million, compared to $483 million in the prior-year quarter
- Portfolio Yield was 33.2%, an increase of 69 basis points compared to the prior-year quarter
- Owned Principal Balance at End of Period was $2.7 billion, compared to $2.9 billion in the prior-year quarter
- Annualized Net Charge-Off Rate of 11.9% as compared to 11.8% for the prior-year quarter
- 30+ Day Delinquency Rate of 5.2% as compared to 5.5% for the prior-year quarter
Operational Drivers
Originations - Aggregate Originations for the third quarter were $480 million, virtually flat compared to $483 million in the prior-year quarter, despite a decrease in average loan size under a conservative credit posture from $3,975 to $3,244.
Portfolio Yield - Portfolio Yield for the third quarter was 33.2%, an increase of 69 basis points as compared to 32.5% in the prior-year quarter, primarily attributable to increased pricing on loans.
Financial Results
Revenue - Total revenue for the third quarter was $250 million, a decrease of 7% as compared to $268 million in the prior-year quarter. The decrease was primarily attributable to a 7% decline in our Average Daily Principal Balance. Net revenue for the third quarter was $63 million, compared to net revenue of $85 million in the prior-year quarter primarily due to the decline in total revenue, a non-cash mark on our ABS notes due to their weighted average price increasing from 96.0% to 97.8% and an increase in interest expense.
Operating Expense and Adjusted Operating Expense1 - For the third quarter, total operating expense was $102 million, a decrease of 17% as compared to $123 million in the prior-year quarter. The decrease is attributable to a combined set of cost reduction initiatives announced in 2023 and 2024. The Company remains on track to reduce its operating expenses to $97.5 million or below by the fourth quarter of 2024. Adjusted Operating Expense, which excludes stock-based compensation expense and certain non-recurring charges, decreased 17% year-over-year to $96 million.
Net Income (Loss) and Adjusted Net Income (Loss)1 - Net loss was $30 million as compared to a net loss of $21 million in the prior-year quarter. The increased loss was attributable to the decline in total revenue, a non-cash mark on our ABS notes due to their weighted average price increasing from 96.0% to 97.8% and an increase in interest expense, partially offset by lower operating expenses. Adjusted Net Income was $0.9 million as compared to Adjusted Net Loss of $12 million in the prior-year quarter. The increase in Adjusted Net Income was attributable to the aforementioned expense reduction initiatives, along with lower net charge-offs.
Earnings (Loss) Per Share and Adjusted EPS1 - GAAP net loss per share, basic and diluted, were both $0.75 during the third quarter, compared to GAAP net loss per share, basic and diluted of $0.55 in the prior-year quarter. Adjusted Earnings Per Share was $0.02 as compared to $(0.31) in the prior-year quarter.
Adjusted EBITDA1 - Adjusted EBITDA was $31 million, up from $14 million in the prior-year quarter, driven by expense reduction initiatives and lower net charge-offs, partially offset by higher interest expense.
Credit and Operating Metrics
Net Charge-Off Rate - The Annualized Net Charge-Off Rate for the quarter was 11.9%, compared to 11.8% for the prior-year quarter. Net Charge-offs for the quarter were down to $82 million, compared to $88 million for the prior-year quarter.
30+ Day Delinquency Rate - The Company's 30+ Day Delinquency Rate was 5.2% at the end of the quarter, compared to 5.5% at the end of the prior-year quarter.
Operating Expense Ratio and Adjusted Operating Expense Ratio1 - Operating Expense Ratio for the quarter was 14.7% as compared to 16.4% in the prior-year quarter, a 164 basis point improvement. Adjusted Operating Expense Ratio was 13.9% as compared to 15.6% in the prior-year quarter, a 165 basis point improvement. The Adjusted Operating Expense Ratio excludes stock-based compensation expense and certain non-recurring charges, such as expenses related to the credit card portfolio sale. The improvement in Adjusted Operating Expense Ratio is primarily attributable to the Company's focus on reducing operating expenses, partially offset by a decrease in Average Daily Principal Balance under its conservative credit posture.
Return On Equity ("ROE") and Adjusted ROE1 - ROE for the quarter was (35)%, as compared to (19)% in the prior-year quarter. The decline was attributable to the increased net loss. Adjusted ROE for the quarter was 1.1%, as compared to (10)% in the prior-year quarter.
| 1 Beginning 1Q24, we updated our calculations of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Operating Expense. To align with these updated calculations we also updated Adjusted EPS and Adjusted Return on Equity. Prior periods presented here have been updated to reflect the prior period numbers on a comparable basis. See Appendix for non-GAAP reconciliation to the most comparable GAAP measure. |
Secured personal loans - As of September 30, 2024, the Company had a secured personal loan receivables balance of $141 million, up from $119 million at the end of the third quarter of 2023. Available only in California as of the end of last year, Oportun now also offers secured personal loans in Texas, Florida, Arizona, New Jersey and Illinois. Through the first three quarters of 2024, secured personal loans losses have run over 500 basis points lower compared to unsecured personal loans, with revenue per loan over 60% higher due to larger average loan sizes.
Credit cards receivable - As of September 30, 2024, the Company had a credit cards receivable balance of $89 million, down 23% from $116 million at the end of the third quarter of 2023. On September 24, 2024, the Company signed a definitive agreement to sell its credit card portfolio, and the sale has closed as of the date of this release.
Funding and Liquidity
As of September 30, 2024, total cash was $229 million, consisting of cash and cash equivalents of $72 million and restricted cash of $157 million. Cost of Debt and Debt-to-Equity were 7.8% and 8.7x, respectively, for and at the end of the third quarter 2024 as compared to 6.3% and 6.6x, respectively, for and at the end of the prior-year quarter. As of September 30, 2024, the Company had $476 million of undrawn capacity on its personal loan warehouse lines totaling $552 million. As of September 30, 2024, the Company had $7 million of undrawn capacity on its existing $60 million credit card warehouse line. The Company's credit card warehouse line has been repaid in full and terminated as of the date of this release, concurrent with the sale of the credit card portfolio.
Financial Outlook for Fourth Quarter and Full Year 2024
| 4Q 2024 | Full Year 2024 | ||
| Total Revenue | $246 - $250M | $997 - $1,001M | |
| Annualized Net Charge-Off Rate | 11.8% +/- 15 bps | 12.0% +/- 10 bps | |
| Adjusted EBITDA1 | $28 - $30M | $92 - $94M |
| 1 See the section entitled "About Non-GAAP Financial Measures” for an explanation of non-GAAP measures, including revised Adjusted EBITDA, and the table entitled "Reconciliation of Forward Looking Non-GAAP Financial Measures” for a reconciliation of non-GAAP to GAAP measures. |
About Non-GAAP Financial Measures
About Oportun
Forward-Looking Statements
Contacts
(650) 590-4323
Media Contact
Michael Azzano
Cosmo PR for Oportun
(415) 596-1978
Oportun and the Oportun logo are registered trademarks of Oportun, Inc.
| Oportun Financial Corporation CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share data, unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | ||||||||||||||||
| Interest income | $ | 230.0 | $ | 243.3 | $ | 692.0 | $ | 721.3 | ||||||||
| Non-interest income | 19.9 | 25.0 | 58.8 | 73.0 | ||||||||||||
| Total revenue | 250.0 | 268.2 | 750.8 | 794.3 | ||||||||||||
| Less: | ||||||||||||||||
| Interest expense | 55.7 | 47.0 | 164.5 | 127.4 | ||||||||||||
| Net decrease in fair value | (131.6 | ) | (136.1 | ) | (384.6 | ) | (458.3 | ) | ||||||||
| Net revenue | 62.6 | 85.1 | 201.8 | 208.6 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Technology and facilities | 40.6 | 52.7 | 128.3 | 164.7 | ||||||||||||
| Sales and marketing | 17.4 | 18.9 | 49.7 | 57.2 | ||||||||||||
| Personnel | 21.0 | 28.6 | 67.5 | 96.7 | ||||||||||||
| Outsourcing and professional fees | 10.1 | 10.5 | 28.7 | 34.2 | ||||||||||||
| General, administrative and other | 13.0 | 11.9 | 46.8 | 52.1 | ||||||||||||
| Total operating expenses | 102.1 | 122.5 | 320.9 | 404.9 | ||||||||||||
| Income (loss) before taxes | (39.5 | ) | (37.4 | ) | (119.1 | ) | (196.4 | ) | ||||||||
| Income tax benefit | (9.5 | ) | (16.2 | ) | (31.7 | ) | (58.2 | ) | ||||||||
| Net loss | $ | (30.0 | ) | $ | (21.1 | ) | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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