OppFi (OPFI) Q1 2025 Earnings Call May 07, 2025 09:00 AM ET Company Participants Mike Gallentine - Head of IRTodd Schwartz - Founder, Executive Chairman & CEOPamela Johnson - CFOZachary Oster - Equity Research AssociateDave Storms - Director of Equity Research Conference Call Participants Scott Buck - Managing Director & Senior Technology AnalystLuke Horton - VP - Senior Equity Research Analyst Operator Please standby, your program is about to begin. If you need assistance on today's conference, Good mornin ...

Financial Data and Key Metrics Changes - The first quarter of 2025 was a record quarter for the company, achieving record quarterly revenue, adjusted net income, and operating margin [5][11] - Total revenue increased to $140 million, up 10% year over year, while adjusted net income surged 285% to a record $34 million, up from $9 million [13][15] - Adjusted earnings per share grew significantly to $0.38 from $0.10 last year [15] - The annualized net charge off rate improved to 35% from 48%, and total expenses before interest expense declined to $38 million, an 18% decrease [8][15] Business Line Data and Key Metrics Changes - Net originations grew 16% to $189 million, with retained net originations increasing 11% to $169 million [13] - The auto approval rate improved to 79% in Q1 2025, up from 73% in Q1 2024, contributing to a 44% increase in net revenue to $91 million [8][14] - The company’s investment in Biddy continued to drive profitability and cash flow, indicating strong performance in the small business financing sector [10] Market Data and Key Metrics Changes - The company noted a significant imbalance between supply and demand for working capital among small businesses, highlighting growth opportunities in this market [10] - The credit quality of the customer base improved, resulting in a 15% decrease in gross charge offs to $59 million and a 25% increase in recoveries to $11 million [13] Company Strategy and Development Direction - The company is focused on becoming a leading tech-enabled digital finance platform, collaborating with banks to offer financial products and services to everyday Americans [11] - The strategy includes exploring new direct response initiatives and expanding marketing channel partners to sustain growth [6] - The company is actively looking for inorganic growth opportunities, particularly in the small business and consumer POS spaces [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong revenue momentum and profitable growth throughout 2025 and into 2026 [11] - The company anticipates that operational improvements and investments will continue to generate strong results for the foreseeable future [12] - Management noted stability in consumer behavior despite macroeconomic uncertainties, with no significant changes observed in customer patterns [42] Other Important Information - The company paid off its corporate debt in Q1 2025 and maintained a strong balance sheet with $91 million in cash and cash equivalents [6][15] - A special dividend of $21.7 million was paid, reflecting the company's financial strength and commitment to rewarding shareholders [7][25] Q&A Session Summary Question: What changed regarding the adjusted net income beat from the previous guidance? - Management indicated that operational efficiencies and strong repayment rates contributed to better-than-expected results [20][22] Question: Are there any hesitations in investing in small businesses due to macro uncertainty? - Management confirmed that they are actively assessing underwriting and believe Biddy's short-duration products position them well to navigate uncertainties [23][24] Question: What is the thought process behind moving towards regular dividends? - Management emphasized the importance of preserving flexibility for capital deployment while rewarding shareholders [26][27] Question: What are the criteria for potential inorganic opportunities? - Management is focused on the small business space and consumer POS, looking for synergies with current offerings [28] Question: How is the yield and credit box performing amid macro trends? - Management stated they have maintained discipline in their credit box, leading to improved yields due to better repayment rates [34] Question: Are there plans for share repurchases? - Management is considering share repurchases but is weighing it against other attractive capital options [36] Question: What are the current customer patterns in light of macro events? - Management reported stable customer behavior and no significant changes in borrowing activities [41][42] Question: How many more levers are available for cost discipline? - Management highlighted continuous improvement in operational efficiency as a core focus, with ongoing efforts to enhance auto approval rates [45][46] Question: What is the outlook for Q2 and the remainder of the year? - Management expressed optimism about growth momentum and the execution of their larger vision for the business [50][52]

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. OppFi Inc. (OPFI) came out with quarterly earnings of $0.38 per share, beating the Zacks Consensus Estimate of $0.26 per share. This compares to earnings of $0.10 per share a year ago. These figures are adjusted for non- ...

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Non-GAAP Financial Measures Q1 2025 Earnings Presentation May 7, 2025 Disclaimer This presentation (the "Presentation") of OppFi Inc. ("OppFi" or the "Company") is for information purposes only. Certain information contained herein has been derived from sources prepared by third parties. While such information is believed to be reliable for the purposes used herein, the Company makes no representation or warranty with respect to the accuracy of such information. Trademarks and trade names referred to in thi ...

Core Viewpoint - OppFi Inc. (OPFI) is expected to report first-quarter 2025 results on May 7, with revenue estimates of $137.7 million, indicating an 8.1% growth year-over-year, and earnings per share estimated at 26 cents, reflecting over 100% growth from the previous year [1] Financial Performance - The company has a strong earnings surprise history, beating the Zacks Consensus Estimate in the last four quarters with an average earnings surprise of 73% [2] - OPFI's Earnings ESP is currently at 0.00%, and it holds a Zacks Rank of 1 (Strong Buy) [3][4] Market Position and Strategy - OppFi's strategy focuses on providing affordable credit to underbanked customers, a market projected to grow at a 13% CAGR, reaching $7 trillion by 2032 [5] - The company targets subprime and non-prime credit holders often overlooked by traditional financial institutions [6] Stock Performance - OppFi shares have increased by 245.3% over the past year, outperforming the industry average of 21.7% and the Zacks S&P 500 composite's 10.7% rise [7] - The stock is currently trading at a trailing 12-month price-to-earnings ratio of 8.70, significantly lower than the industry average of 22.84 and cheaper than peers Corpay and Evertec [10] Operational Efficiency - In Q4 2024, total net originations grew by 11% year-over-year, driven by bank partners expanding into new states and improved lead evaluation capabilities [11] - The proportion of net charge-offs to revenue decreased from 46% to 42%, indicating better asset quality and risk management [12] - The company's machine learning models improved credit evaluation, increasing average yield to 130% from 127% year-over-year [13] - Automated loan approval technology approved 79.5% of loans without human intervention, a 630 basis point increase from the previous year, enhancing cost management [14] Investment Outlook - OppFi is positioned to benefit from bank partnerships and improved risk management through its machine learning models, which reduce losses [15] - The company is fundamentally strong with a discounted valuation, suggesting potential for continued stock price appreciation [17]

Group 1 - FirstCash Holdings (FCFS) is currently outperforming its peers in the Business Services sector, with a year-to-date return of 28.1% compared to the sector average of -2.6% [4] - FCFS holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, with the consensus estimate for full-year earnings having increased by 0.7% over the past three months [3] - The Financial Transaction Services industry, which includes FCFS, has an average year-to-date return of -0.7%, further highlighting FCFS's strong performance within its industry [6] Group 2 - OppFi Inc. (OPFI) is another stock in the Business Services sector that has shown strong performance, with a year-to-date return of 24% [4] - The consensus EPS estimate for OppFi Inc. has increased by 10.9% over the past three months, and it currently holds a Zacks Rank of 1 (Strong Buy) [5] - Both FirstCash Holdings and OppFi Inc. are recommended for investors interested in the Business Services sector due to their solid performance [7]

Core Viewpoint - Both OppFi Inc. (OPFI) and Futu Holdings Limited (FUTU) are fintech companies leveraging technology to transform traditional financial services, attracting growth-oriented investors seeking opportunities in the fintech sector [1][2] Company Overview - Futu Holdings provides fully digitalized financial services, focusing on online brokerage and wealth management primarily in the China market, while OppFi offers alternative lending solutions to underserved U.S. customers [2] - Both companies aim to disrupt traditional financial services through advanced technology [2] OppFi's Case - OppFi's strategy targets affordable credit for underbanked customers, with a projected market growth of 13% CAGR, reaching a $7 trillion market by 2032 [3] - The company utilizes AI and machine learning to enhance credit evaluation, improving the identification and approval of higher-quality applicants [4] - In Q4 2024, 79.5% of OppLoans were approved instantly without human intervention, marking a 630 basis point increase from Q4 2023, contributing to a 60 basis point reduction in expenses before interest year over year [5] Futu Holdings' Case - Futu challenges traditional brokerage with a fully digital platform and low fees, utilizing AI for operational efficiency, resulting in a 116% increase in operating income and a 690 basis point improvement in margin year over year in Q4 2024 [6] - The company launched various AI-driven features to enhance client experience, including automatic interpretation of corporate announcements [7] - Futu's product velocity was high in Q4 2024, with 209 iterations of its mobile and desktop applications and a 28.7% year-over-year increase in registered clients, leading to an 87% surge in top-line revenue [8][9] Financial Estimates - The Zacks Consensus Estimate for Futu's 2025 sales and EPS indicates year-over-year growth of 19.1% and 31.5%, respectively [11] - For OppFi, the estimates show 9.7% growth in sales and 12.6% in EPS for 2025 [12] Valuation Comparison - Futu Holdings trades at a forward earnings multiple of 12.57X, below its 12-month median of 14.22X, while OppFi's forward earnings multiple is 8.41X, higher than its median of 6.73X [13] Conclusion - Both OPFI and FUTU are notable fintech players, but OPFI is viewed as a more compelling investment opportunity due to its focus on advanced AI and ML in the underserved U.S. credit market, operational efficiency, and ability to disrupt traditional lending [15]

OppFi Inc. (OPFI) shares have skyrocketed 202.9% in a year, outperforming the 16.8% rise of its industry and the 9.6% increase in the Zacks S&P 500 Composite.OPFI performed significantly better than its industry peers, Fiserv, Inc. (FI) and Paymentus Holdings, Inc. (PAY) . FI and PAY shares have rallied 44.7% and 57.6% in a year.One-Year Price Performance Image Source: Zacks Investment Research OppFi has also outperformed its industry, Fiserv and Paymentus Holdings in the past six months. OPFI shares have s ...

The Business Services group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Information Services Group (III) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.Information Services Group is a member of the Business Services sector. This group includes 272 individual stocks and c ...