Oportun Financial (US:OPRT)2024-11-12 22:18Lending and Credit Performance - The company has extended over $19.2 billion in responsible credit through more than 7.3 million loans and credit cards in its 18-year lending history [125]. - As of September 30, 2024, the average loan size for personal loans originated was $3,173, with a weighted average term of 41 months and an APR of 33.9% [128]. - The average loan size for secured personal loans originated during the three months ended September 30, 2024, was $7,088, with a weighted average term of 51 months and an APR of 30.7% [129]. - The average APR of outstanding credit card receivables was 34.1% as of September 30, 2024, with credit lines ranging from $300 to $3,000 [130]. - Aggregate Originations decreased to $480.2 million for the three months ended September 30, 2024, representing a 0.5% decrease from $482.7 million for the same period in 2023 [141]. - For the nine months ended September 30, 2024, Aggregate Originations decreased to $1,253.1 million, an 8.9% decrease from $1,375.8 million in 2023 [142]. - The company has implemented tighter credit standards since July 2022, which has positively impacted credit performance on newly originated loans [146]. Financial Performance - Total revenue for the three months ended September 30, 2024, was $249.951 million, down from $268.220 million in 2023 [154]. - Net loss for the three months ended September 30, 2024, was $(29.956) million compared to $(21.138) million in 2023 [154]. - Operating expenses for the three months ended September 30, 2024, totaled $102.081 million, a decrease from $122.506 million in 2023 [154]. - Interest income decreased by $13.2 million, or 5.4%, from $243.3 million for the three months ended September 30, 2023, to $230.0 million for the same period in 2024, primarily due to a 7.2% decline in Average Daily Principal Balance [155]. - Non-interest income decreased by $5.1 million, or 20.3%, from $25.0 million for the three months ended September 30, 2023, to $19.9 million for the same period in 2024, driven by decreases in fees related to the Pathward program and loan sales [157]. - Total interest expense increased by $8.8 million, or 18.7%, from $47.0 million for the three months ended September 30, 2023, to $55.7 million for the same period in 2024, due to a 153 basis point increase in Cost of Debt [161]. - Adjusted EBITDA for the three months ended September 30, 2024, was $31.366 million, compared to $14.455 million for the same period in 2023, reflecting a significant increase [213]. - Adjusted Net Income for the three months ended September 30, 2024, was $931, compared to a loss of $11.771 million for the same period in 2023, indicating improved profitability [216]. Delinquency and Charge-Off Rates - The 30+ Day Delinquency Rate improved to 5.2% as of September 30, 2024, down from 5.5% in 2023, attributed to enhanced credit quality [144]. - Annualized Net Charge-Off Rate for the three months ended September 30, 2024, was 11.9%, slightly up from 11.8% in 2023, while remaining flat at 12.1% for the nine months [145]. - Total charge-offs, net of recoveries for the nine months ended September 30, 2024, were $251.6 million, a decrease of $21.5 million or 7.9% from $273.0 million in 2023 [172]. - Annualized Net Charge-Off Rate remained flat at 12.1% for the nine months ended September 30, 2024, compared to 12.1% for the same period in 2023 [172]. Cost Management and Operational Efficiency - The company plans to reduce operating expenses by an additional $30 million on an annualized basis to improve profitability [137]. - A workforce reduction of approximately 12% of corporate staff was implemented, resulting in nonrecurring, pre-tax charges of $2.0 million for the nine months ended September 30, 2024 [137]. - Technology and facilities expense decreased by $36.4 million, or 22.1%, from $164.7 million for the nine months ended September 30, 2023, to $128.3 million for the same period in 2024 [177]. - Sales and marketing expenses decreased by $7.6 million, or 13.2%, from $57.2 million for the nine months ended September 30, 2023, to $49.7 million for the same period in 2024 [179]. - Customer Acquisition Cost (CAC) decreased by 22.5% from $169 for the nine months ended September 30, 2023, to $131 for the same period in 2024 [179]. - Personnel expense decreased by $29.3 million, or 30.3%, from $96.7 million for the nine months ended September 30, 2023, to $67.5 million for the same period in 2024 [183]. Tax and Deferred Assets - Income tax benefit decreased by $6.7 million, or 41.4%, from $16.2 million for the three months ended September 30, 2023, to $9.5 million for the three months ended September 30, 2024 [192]. - Income tax benefit decreased by $26.6 million, or 46%, from $58.2 million for the nine months ended September 30, 2023, to $31.7 million for the nine months ended September 30, 2024 [193]. - As of September 30, 2024, the company has $79.6 million of U.S. net deferred tax assets, with $83.4 million related to tax-effected net operating losses and other carryforwards [194]. Liquidity and Financing - Total liquidity as of September 30, 2024, was $1.44 billion, with $704.89 million utilized [226]. - The company had $1.9 billion of outstanding asset-backed notes as of September 30, 2024 [232]. - As of September 30, 2024, the company had secured financing facilities with warehouse lines totaling $611.7 million, with an undrawn capacity of $482.9 million [233]. - The company believes its existing cash balance and anticipated positive cash flows will be sufficient to meet its cash operating expense and capital expenditure requirements for at least the next 12 months [250]. Market and Economic Conditions - The company expects continued volatility in fair value primarily due to macroeconomic conditions [171]. - The company expects interest expense to increase as lower interest rate asset-backed notes amortize and are replaced with more expensive current funding [163]. Compliance and Legal Matters - As of September 30, 2024, the company was in compliance with all covenants and requirements on its outstanding debt and available credit [243]. - The company is not currently involved in any legal proceedings that would materially affect its business or financial condition [259].