OppFi (OPFI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements and management's discussion and analysis for the period ended March 31, 2025 ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents OppFi Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed explanatory notes Consolidated Balance Sheets The consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2024, to March 31, 2025, with notable changes in finance receivables, senior debt, and warrant liabilities | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total assets | $640,072 | $641,171 | $(1,099) | (0.2)% | | Total liabilities | $403,308 | $406,958 | $(3,650) | (0.9)% | | Total stockholders' equity | $236,764 | $234,213 | $2,551 | 1.1% | | Finance receivables at fair value | $454,683 | $473,696 | $(19,013) | (4.0)% | | Senior debt, net | $287,998 | $318,758 | $(30,760) | (9.6)% | | Warrant liabilities | $36,715 | $15,108 | $21,607 | 143.0% | Consolidated Statements of Operations For the three months ended March 31, 2025, OppFi Inc. reported a net loss attributable to the company, despite a significant increase in net income and income from operations, primarily due to a substantial increase in net income attributable to noncontrolling interest and a negative change in the fair value of warrant liabilities | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total Revenue | $140,268 | $127,343 | $12,925 | 10.1% | | Net Revenue | $90,810 | $63,214 | $27,596 | 43.7% | | Income from operations | $42,492 | $5,284 | $37,208 | 704.1% | | Net income | $20,390 | $10,131 | $10,259 | 101.3% | | Net (loss) income attributable to OppFi Inc. | $(11,372) | $5,537 | $(16,909) | (305.4)% | | Basic (Loss) Earnings Per Share | $(0.48) | $0.29 | $(0.77) | (265.5)% | | Diluted (Loss) Earnings Per Share | $(0.48) | $0.10 | $(0.58) | (580.0)% | | Change in fair value of warrant liabilities | $(21,607) | $5,171 | $(26,778) | (517.8)% | Consolidated Statements of Stockholders' Equity The consolidated statements of stockholders' equity show an increase in total stockholders' equity from December 31, 2024, to March 31, 2025, driven by net income attributable to noncontrolling interest and additional paid-in capital, partially offset by a net loss attributable to OppFi Inc. and member distributions | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | :-------------------- | | Total Stockholders' Equity | $234,213 | $236,764 | $2,551 | | Net (loss) income | $(55,127) | $(72,168) | $(17,041) | | Noncontrolling Interest | $201,439 | $214,214 | $12,775 | | Additional Paid-in Capital | $93,903 | $100,720 | $6,817 | | Common stock dividend | — | $(6,414) | $(6,414) | | Member distributions | — | $(11,251) | $(11,251) | Consolidated Statements of Cash Flows Net cash provided by operating activities increased for the three months ended March 31, 2025, compared to the same period in 2024, while net cash used in investing and financing activities also increased, resulting in a lower net increase in cash and restricted cash | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Net cash provided by operating activities | $83,740 | $74,427 | $9,313 | 12.5% | | Net cash used in investing activities | $(34,241) | $(18,005) | $(16,236) | 90.2% | | Net cash used in financing activities | $(47,019) | $(41,644) | $(5,375) | 12.9% | | Net increase in cash and restricted cash | $2,480 | $14,778 | $(12,298) | (83.2)% | | Cash and restricted cash, ending | $90,768 | $88,721 | $2,047 | 2.3% | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's business, significant accounting policies, and specific financial statement line items, including fair value measurements, debt arrangements, equity, stock-based compensation, income taxes, and legal contingencies Note 1. Description of Business and Significant Accounting Policies OppFi Inc. operates as a tech-enabled digital finance platform offering installment loans through bank partnerships, utilizing an Up-C structure and adhering to GAAP - OppFi Inc. is a tech-enabled digital finance platform offering installment loans (OppLoans) through bank partnerships, targeting everyday Americans[27] - The company operates under an "Up-C" structure, with OppFi Inc. owning approximately 29.3% of OppFi Units as of March 31, 2025, and controlling OppFi-LLC as its sole manager[28] - In March 2025, the Company reversed $1.5 million in previously recognized expenses related to its OppFi Card product due to a discharge agreement with a bank partner[39] Note 2. Finance Receivables at Fair Value Finance receivables at fair value decreased from December 31, 2024, to March 31, 2025, primarily due to net charge-offs and a negative net change in fair value, despite new originations | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Unpaid principal balance of finance receivables | $406,579 | $425,240 | $(18,661) | | Finance receivables at fair value | $454,683 | $473,696 | $(19,013) | | Balance at the beginning of the period | $473,696 | $463,320 | $10,376 | | Originations | $166,879 | $152,518 | $14,361 | | Repayments | $(137,028) | $(136,608) | $(420) | | Charge-offs, net | $(48,512) | $(60,987) | $12,475 | | Net change in fair value | $(946) | $(3,115) | $2,169 | Note 3. Property, Equipment and Software, Net The net value of property, equipment, and software increased from December 31, 2024, to March 31, 2025, driven by an increase in capitalized technology | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Capitalized technology | $71,874 | $67,515 | $4,359 | | Total property, equipment and software, net | $16,305 | $13,676 | $2,629 | Note 4. Accrued Expenses Accrued expenses slightly decreased from December 31, 2024, to March 31, 2025, with notable shifts including a new dividend payable and a decrease in accrued payroll and benefits, partially offset by an increase in deferred lease revenue | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Total Accrued expenses | $30,964 | $32,411 | $(1,447) | | Dividend payable | $6,414 | — | $6,414 | | Accrued payroll and benefits | $2,635 | $10,141 | $(7,506) | | Deferred lease revenue | $1,858 | $212 | $1,646 | Note 5. Leases The company entered into a new sublease agreement in January 2025, extending the sublease of an office facility through August 2030, which resulted in deferred lease revenue and an additional impairment expense on the operating lease right-of-use asset - On January 30, 2025, OppFi entered a new sublease agreement for an office facility, extending it to August 2030, expecting to receive $1.7 million over the term[50] - The new sublease resulted in $1.9 million in deferred lease revenue as of March 31, 2025, and an additional impairment expense of $0.2 million on the operating lease right-of-use asset[50] | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total lease cost | $950 | $854 | | Sublease income | $(80) | $(80) | Note 6. Borrowing OppFi-LLC amended its revolving credit agreement in February 2025, increasing the facility size to $300 million and extending the maturity to February 2029, while also fully repaying and terminating its term loan in March 2025. Total senior debt decreased significantly as a result - On February 13, 2025, OppFi-LLC amended its revolving credit agreement, increasing the facility from $250 million to $300 million and extending the maturity to February 13, 2029[55] - On March 4, 2025, OppFi-LLC fully repaid and terminated its senior secured multi-draw term loan agreement[56] | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Total senior debt, net | $287,998 | $318,758 | $(30,760) | | Total revolving lines of credit | $287,998 | $288,828 | $(830) | | Term loan, net | — | $29,930 | $(29,930) | | Total interest expense | $9,200 | $10,800 | $(1,600) | | Amortized debt issuance costs | $1,000 | $600 | $400 | Note 7. Warrant Liabilities The fair value of warrant liabilities increased significantly for the three months ended March 31, 2025, primarily due to an increase in the share price of OppFi's Class A common stock | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Change in fair value of warrant liabilities | $21,607 | $(5,171) | $26,778 | | Public Warrants (change in fair value) | $18,800 | $(3,700) | $22,500 | | Private Placement Warrants (change in fair value) | $2,800 | $(1,500) | $4,300 | Note 8. Stockholders' Equity OppFi declared a dividend of $0.25 per share for Class A common stock and a distribution of $0.25 per unit for OppFi-LLC Class A common units in March 2025. No share repurchases occurred during the quarter, with $16.4 million remaining available under the repurchase program - On March 25, 2025, OppFi's Board declared a dividend of $0.25 per share for Class A common stock[61] - A distribution of $0.25 per unit was approved for OppFi-LLC Class A common units on March 25, 2025[62] - No share repurchase activities occurred during the three months ended March 31, 2025, with $16.4 million remaining under the authorization[61] Note 9. Stock-Based Compensation The company recognized stock-based compensation expense for stock options, restricted stock units (RSUs), performance stock units (PSUs), and the Employee Stock Purchase Plan (ESPP) for the three months ended March 31, 2025, with RSUs accounting for the largest portion of unrecognized expense | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Stock options compensation expense | $200 | $100 | | RSUs compensation expense | $1,000 | $800 | | PSUs compensation expense | $23 | $37 | | ESPP compensation expense | $40 | $27 | - As of March 31, 2025, total unrecognized compensation expense for RSUs was $4.0 million, to be recognized over approximately 2.4 years[66] Note 10. Income Taxes OppFi's effective income tax rate for the three months ended March 31, 2025, was 7.5%, significantly lower than the federal statutory rate of 21%, primarily due to the noncontrolling interest in the Up-C structure and the fair value adjustment of warrant liabilities | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense | $1.7 million | $0.4 million | | Income before income taxes | $22.0 million | $10.5 million | | Effective income tax rate | 7.5% | 3.8% | - The effective tax rate differs from the 21% federal statutory rate mainly due to noncontrolling interest in the Up-C structure, nondeductible expenses, state income taxes, and warrant liability adjustments[72] - As of March 31, 2025, OppFi owned 29.3% of OppFi-LLC's outstanding units, up from 17.4% in the prior year[73] Note 11. Fair Value Measurements The company measures financial assets and liabilities at fair value on a recurring basis, with finance receivables categorized as Level 3, Public Warrants as Level 1, and Private Placement Warrants as Level 3, using a Black-Scholes model - Finance receivables are measured at fair value using internally developed discounted cash flow models (Level 3)[78] - Public Warrants are categorized as Level 1 due to observable market quotes, while Private Placement Warrants are Level 3, measured using a Black-Scholes option-pricing model[78] | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Finance receivables at fair value (Level 3) | $435,737 | $455,344 | | Warrant liability - Public Warrants (Level 1) | $29,108 | $10,342 | | Warrant liability - Private Placement Warrants (Level 3) | $7,607 | $4,766 | Note 12. Segment Reporting OppFi operates as a single reportable segment, managing its business activities on a consolidated basis, with the CEO serving as the chief operating decision maker who assesses financial performance using consolidated net income - OppFi operates as a single reportable segment, with all business activities managed on a consolidated basis[83] - The Chief Executive Officer is the chief operating decision maker (CODM) and uses consolidated net income to assess financial performance and make strategic decisions[84] Note 13. Commitments, Contingencies and Related Party Transactions OppFi is involved in legal proceedings, including a declaratory relief action against the California DFPI and a class action lawsuit, and made payments under a Tax Receivable Agreement - OppFi is actively defending a lawsuit against the California DFPI seeking a declaration that state interest rate caps (AB 539) do not apply to loans originated by its bank partners[90] - A putative class action lawsuit was filed against certain former directors and officers, alleging breaches of fiduciary duties related to the merger with OppFi-LLC, with OppFi obligated to indemnify certain defendants[91] - During the three months ended March 31, 2025, OppFi made $1.0 million in payments to members under the Tax Receivable Agreement[92] Note 14. Concentration of Credit Risk OppFi's finance receivables portfolio has a concentration of credit risk in Texas, Florida, and Virginia, which collectively accounted for approximately 35% of the portfolio as of March 31, 2025 - As of March 31, 2025, consumers in Texas (13%), Florida (11%), and Virginia (11%) collectively represented approximately 35% of the company's finance receivables portfolio[94] - The company is exposed to concentration risk by providing financing to borrowers unable to obtain traditional bank financing[94] Note 15. Retirement Plan OppFi sponsors a 401(k) retirement plan for its employees, matching contributions up to 4% of eligible compensation. Company contributions decreased slightly for the three months ended March 31, 2025, compared to the prior year - The company sponsors a 401(k) plan with a matching contribution of up to 4% on eligible employee compensation[95] | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | | Company's 401(k) contribution | $300 | $400 | Note 16. (Loss) Earnings Per Share OppFi reported a basic and diluted loss per share of $0.48 for the three months ended March 31, 2025, a significant decrease from earnings per share in the prior year, with Class V Voting Stock excluded from diluted EPS calculation due to its anti-dilutive effect | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net (loss) income attributable to OppFi Inc. | $(11,372) | $5,537 | | Basic (Loss) Earnings Per Share | $(0.48) | $0.29 | | Diluted (Loss) Earnings Per Share | $(0.48) | $0.10 | | Weighted-average Class A common stock outstanding - Basic | 23,691,769 | 19,205,427 | | Weighted-average units outstanding - diluted | 23,691,769 | 86,243,498 | - Class V Voting Stock and other dilutive securities were excluded from diluted EPS calculation for Q1 2025 due to their anti-dilutive effect[98] Note 17. Subsequent Events The company has evaluated events through the financial statement issuance date and identified no subsequent events requiring disclosure - No subsequent events requiring disclosure were identified through the financial statement issuance date[99] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on OppFi's financial condition and results of operations for the three months ended March 31, 2025, highlighting key financial performance, operational metrics, and a detailed comparison with the prior year, including non-GAAP measures and liquidity analysis OVERVIEW OppFi Inc. is a tech-enabled digital finance platform offering installment loans through bank partnerships and holds a 35% equity interest in Bitty Holdings, LLC - OppFi is a tech-enabled digital finance platform providing financial products and services, primarily installment loans (OppLoans), to everyday Americans[101] - The company holds a 35% equity interest in Bitty Holdings, LLC, which offers revenue-based financing to small businesses[101] - OppLoans maintains a 4.5/5.0 star rating on Trustpilot, reflecting a strong customer experience[101] HIGHLIGHTS OppFi reported significant financial improvements for the three months ended March 31, 2025, including a 101.3% increase in net income, a 285.1% increase in Adjusted Net Income, and growth in total revenue, net originations, and ending receivables | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | :--------- | | Net income | $20.4 million | $10.1 million | $10.3 million | 101.3% | | Adjusted net income | $33.8 million | $8.8 million | $25.0 million | 285.1% | | Adjusted EPS | $0.38 | $0.10 | $0.28 | 280.0% | | Total revenue | $140.3 million | $127.3 million | $12.9 million | 10.1% | | Net originations | $189.2 million | $163.5 million | $25.7 million | 15.7% | | Ending receivables | $406.6 million | $371.4 million | $35.2 million | 9.5% | KEY PERFORMANCE METRICS OppFi's key performance metrics for Q1 2025 show strong growth in originations and ending receivables, improved average yield, and a significant reduction in net charge-offs as a percentage of total revenue and average receivables, alongside an increased auto-approval rate Total Net Originations Total net originations increased by 15.7% for the three months ended March 31, 2025, driven by increased demand from returning customers and credit model improvements, while the percentage of new loans decreased | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total net originations | $189,168 | $163,496 | $25,672 | 15.7% | | Total retained net originations | $168,963 | $152,512 | $16,451 | 10.8% | | Percentage of net originations by new loans | 36.6% | 42.3% | N/A | (13.4)% | - The increase in originations was due to increased demand from returning customers and improvements to the credit model[108] Ending Receivables Ending receivables increased by 9.5% as of March 31, 2025, primarily due to a higher starting balance, increased retained net originations, and lower gross charge-offs | Metric | As of March 31, 2025 (in thousands) | As of March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :--------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Ending receivables | $406,579 | $371,386 | $35,193 | 9.5% | - The increase was driven by a higher beginning balance, higher retained net originations, and lower gross charge-offs[110] Average Yield Average annualized yield increased by 4.8% for the three months ended March 31, 2025, attributed to a decrease in delinquent non-accruing loans and an increase in the average statutory rate from pricing initiatives | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Average yield, annualized | 135.8% | 129.5% | 4.8% | - The increase was driven by a decrease in delinquent loans not accruing interest and an increase in the average statutory rate due to 2024 pricing initiatives[111] Net Charge-Offs as a Percentage of Total Revenue and Net Charge-Offs as a Percentage of Average Receivables Net charge-offs as a percentage of total revenue decreased by 27.8%, and as a percentage of average receivables decreased by 24.3% for the three months ended March 31, 2025, due to a higher yielding portfolio, lower gross charge-offs, and higher recoveries | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (%) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | | Net charge-offs as % of total revenue | 34.6% | 47.9% | (27.8)% | | Net charge-offs as % of average receivables, annualized | 47.0% | 62.0% | (24.3)% | - The decrease was a result of a higher yielding portfolio, lower gross charge-offs, and higher recoveries[113] Auto-Approval Rate The auto-approval rate increased by 7.1% for the three months ended March 31, 2025, reflecting the continued success of algorithmic automation in streamlining the origination process | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (%) | | :------------------ | :-------------------------------- | :-------------------------------- | :--------- | | Auto-approval rate | 78.6% | 73.4% | 7.1% | - The increase was driven by the continued application of algorithmic automation projects[114] RESULTS OF OPERATIONS OppFi's results of operations for the three months ended March 31, 2025, show substantial growth in net revenue and income from operations, driven by higher total revenue and reduced credit losses, though net loss attributable to OppFi Inc. was impacted by warrant liability fair value changes and noncontrolling interests Comparison of the three months ended March 31, 2025 and 2024 A detailed comparison of the three months ended March 31, 2025, and 2024, reveals significant increases in total revenue, net revenue, and income from operations, while total expenses decreased. However, a substantial negative change in the fair value of warrant liabilities led to a net loss attributable to OppFi Inc | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total revenue | $140,268 | $127,343 | $12,925 | 10.1% | | Net revenue | $90,810 | $63,214 | $27,596 | 43.7% | | Total expenses | $48,318 | $57,930 | $(9,612) | (16.6)% | | Income from operations | $42,492 | $5,284 | $37,208 | 704.1% | | Change in fair value of warrant liabilities | $(21,607) | $5,171 | $(26,778) | (517.8)% | | Net (loss) income attributable to OppFi Inc. | $(11,372) | $5,537 | $(16,909) | (305.4)% | Total Revenue Total revenue increased by 10.1% to $140.3 million for the three months ended March 31, 2025, driven by higher average receivables, an increased average statutory rate, and stronger payment activity | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total revenue | $140,268 | $127,343 | $12,925 | 10.1% | - The increase was due to higher average receivables balances, a higher average statutory rate for loans, and stronger payment activity[119] Change in Fair Value of Finance Receivables The change in fair value of finance receivables decreased to $49.5 million for the three months ended March 31, 2025, from $64.1 million in the prior year, primarily due to lower gross charge-offs and a smaller negative fair value adjustment, partially offset by higher recoveries | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Change in fair value of finance receivables | $(49,458) | $(64,102) | $14,644 | (22.8)% | | Gross charge-offs | $59,200 | $69,500 | $(10,300) | (14.8)% | | Recoveries | $10,600 | $8,500 | $2,100 | 24.7% | | Negative fair value adjustment | $(900) | $(3,100) | $2,200 | (71.0)% | Net Revenue Net revenue increased by 43.7% to $90.8 million for the three months ended March 31, 2025, driven by both the increase in total revenue and the decrease in the change in fair value of finance receivables | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :---------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Net revenue | $90,810 | $63,214 | $27,596 | 43.7% | - The increase was due to higher total revenue and a decrease in the change in fair value of, and provision for credit losses on, finance receivables[121] Expenses Total expenses decreased by 16.6% to $48.3 million for the three months ended March 31, 2025, primarily due to lower salary expense, reduced interest expense, and lower professional fees, partially offset by increased direct marketing costs | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Total expenses | $48,318 | $57,930 | $(9,612) | (16.6)% | | Salaries and employee benefits | $13,778 | $15,998 | $(2,220) | (13.9)% | | Interest expense | $10,247 | $11,430 | $(1,183) | (10.4)% | | Professional fees | $4,199 | $5,481 | $(1,282) | (23.4)% | | Direct marketing costs | $10,288 | $9,512 | $776 | 8.2% | - Expenses as a percent of total revenue decreased from 45.5% to 34.4% YoY[123] Income from Operations Income from operations significantly increased by 704.1% to $42.5 million for the three months ended March 31, 2025, driven by higher total revenue, reduced credit losses, and lower expenses | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Income from operations | $42,492 | $5,284 | $37,208 | 704.1% | - The increase was driven by higher total revenue, lower change in fair value and provision for credit losses, and lower expenses[124] Change in Fair Value of Warrant Liabilities The fair value of warrant liabilities increased by $21.6 million for the three months ended March 31, 2025, a significant shift from a decrease in the prior year, primarily due to an increase in OppFi's Class A common stock share price | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Change in fair value of warrant liabilities | $(21,607) | $5,171 | $(26,778) | (517.8)% | - The increase is largely attributed to the increase in the share price of OppFi's Class A common stock[125] Income from Equity Method Investment OppFi recognized $1.1 million in income from its equity method investment in Bitty for the three months ended March 31, 2025, following its acquisition of a 35% equity interest in July 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Income from equity method investment | $1,076 | — | - OppFi acquired a 35% equity interest in Bitty on July 31, 2024, and accounts for it under the equity method[126] Other Income Other income remained consistent at $0.1 million for both periods, primarily from subleasing office space | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------- | :--------------------------------------------- | :--------------------------------------------- | | Other income | $80 | $80 | - Other income for both periods was comprised of income related to subleasing office space[127] Income Before Income Taxes Income before income taxes increased by 109.2% to $22.0 million for the three months ended March 31, 2025, driven by improved operating income and income from equity method investment, despite the negative change in warrant liabilities | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Income before income taxes | $22,041 | $10,535 | $11,506 | 109.2% | Income Tax Expense Income tax expense increased significantly to $1.7 million for the three months ended March 31, 2025, primarily due to OppFi Inc.'s increasing ownership in OppFi-LLC | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :---------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Income tax expense | $1,651 | $404 | $1,247 | 308.5% | - The increase is largely attributed to OppFi Inc.'s increasing ownership in OppFi-LLC[129] Net Income Net income increased by 101.3% to $20.4 million for the three months ended March 31, 2025, reflecting the overall improvements in revenue and expenses, partially offset by tax expenses | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :--------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Net income | $20,390 | $10,131 | $10,259 | 101.3% | Net (Loss) Income Attributable to OppFi Inc. OppFi Inc. reported a net loss of $11.4 million for the three months ended March 31, 2025, a significant decline from net income in the prior year, primarily due to a $21.6 million loss from the change in fair value of warrant liabilities, despite $12.5 million in income from economic interest | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Net (loss) income attributable to OppFi Inc. | $(11,372) | $5,537 | $(16,909) | (305.4)% | | Income from economic interest | $12,500 | $900 | $11,600 | 1288.9% | | Loss due to change in fair value of warrant liabilities | $(21,600) | $5,200 | $(26,800) | (515.4)% | Diluted (Loss) Earnings per Share Diluted loss per share was $0.48 for the three months ended March 31, 2025, as Class V Voting Stock was excluded from the calculation due to its anti-dilutive effect under the if-converted method | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Diluted (Loss) Earnings per Share | $(0.48) | $0.10 | | Weighted average common shares outstanding: Diluted | 23,691,769 | 86,243,498 | - Class V Voting Stock was excluded from diluted EPS calculation for Q1 2025 due to its anti-dilutive effect[132] CONDENSED BALANCE SHEETS The condensed balance sheets show a slight decrease in total assets and liabilities from December 31, 2024, to March 31, 2025, driven by changes in finance receivables, senior debt, and warrant liabilities Comparison as of March 31, 2025 and December 31, 2024 Total assets and liabilities saw minor decreases, while cash and restricted cash increased. Finance receivables decreased due to lower origination and higher payment activity, and total debt decreased due to term loan repayment. Warrant liabilities significantly increased due to valuation changes | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total assets | $640,072 | $641,171 | $(1,099) | (0.2)% | | Cash and restricted cash | $90,768 | $88,288 | $2,480 | 2.8% | | Finance receivables at fair value | $454,683 | $473,696 | $(19,013) | (4.0)% | | Total debt | $287,998 | $318,758 | $(30,760) | (9.7)% | | Warrant liabilities | $36,715 | $15,108 | $21,607 | 143.0% | | Total stockholders' equity | $236,764 | $234,213 | $2,551 | 1.1% | - Finance receivables decreased mainly due to lower origination volume and higher payment activity due to seasonality[134] - Total debt decreased primarily due to the $29.9 million pay down of the remainder of the term loan[135] NON-GAAP FINANCIAL MEASURES OppFi provides non-GAAP financial measures, Adjusted EBT, Adjusted Net Income, and Adjusted EPS, to offer a clearer view of its operating results by excluding non-recurring, non-cash, or non-core business expenses. These metrics show significant year-over-year improvements - Non-GAAP measures (Adjusted EBT, Adjusted Net Income, Adjusted EPS) are used to provide useful period-to-period comparisons by adjusting for certain non-recurring, non-cash, or non-core business expenses[136][138] Adjusted EBT and Adjusted Net Income Adjusted EBT and Adjusted Net Income saw substantial increases for the three months ended March 31, 2025, reflecting improved underlying business performance after excluding income tax expense, other income, changes in warrant liabilities, and other adjustments | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :------------------ | :------------------ | :------------------ | :--------- | :--------- | | Adjusted EBT | $44,177 | $11,487 | $32,690 | 284.6% | | Adjusted net income | $33,817 | $8,781 | $25,036 | 285.1% | - Other adjustments for Q1 2025 included $1.3 million in stock compensation, $0.3 million in severance, $0.3 million in legal matters, and $0.2 million for lease obligations, partially offset by a $1.4 million addback from OppFi Card exit activities[140] Adjusted Earnings Per Share Adjusted EPS increased significantly to $0.38 for the three months ended March 31, 2025, providing a more comprehensive view of per-share earnings by including all common stock and dilutive securities, unlike GAAP Basic and Diluted EPS which are affected by the Up-C structure and anti-dilutive effects | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Adjusted earnings per share | $0.38 | $0.10 | | Weighted average diluted shares outstanding | 87,991,698 | 86,243,498 | - Adjusted EPS includes shares of both classes of common stock and dilutive securities, providing a more representative per-share metric given the company's Up-C structure[141] - Earnout units and associated Class V Voting Stock were forfeited on July 21, 2024, as they were not earned[141] LIQUIDITY AND CAPITAL RESOURCES OppFi maintains strong liquidity with $58.0 million in unrestricted cash and $237.0 million in unused debt capacity as of March 31, 2025, totaling $615.8 million in funding capacity. The company believes these resources are sufficient for its liquidity needs for the next 12 months | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Unrestricted cash | $57,954 | $61,344 | | Undrawn debt | $237,002 | $206,242 | | Total funding capacity | $615,800 | N/A | - The increase in undrawn debt was driven by using excess cash to pay down debt and adding $50 million in capacity to a revolving line of credit[147] - OppFi believes its current liquidity, including unrestricted cash, undrawn debt, and operating income, will be sufficient for the next 12 months[148] CASH FLOWS For the three months ended March 31, 2025, net cash provided by operating activities increased, while net cash used in investing and financing activities also increased, resulting in a lower net increase in cash and restricted cash compared to the prior year | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :--------- | | Net cash provided by operating activities | $83,740 | $74,427 | $9,313 | 12.5% | | Net cash used in investing activities | $(34,241) | $(18,005) | $(16,236) | 90.2% | | Net cash used in financing activities | $(47,019) | $(41,644) | $(5,375) | 12.9% | | Net increase in cash and restricted cash | $2,480 | $14,778 | $(12,298) | (83.2)% | - The increase in cash used in investing activities was mainly due to higher finance receivables originated and acquired and capitalized technology development expenses[152] - The increase in cash used in financing activities was primarily due to increased member distributions and payments for debt issuance costs[153] FINANCING ARRANGEMENTS OppFi's financing arrangements include corporate credit facilities (term loans and revolving loans) and warehouse credit facilities, with total senior debt decreasing to $288.0 million as of March 31, 2025, following the repayment of a term loan and adjustments to revolving lines of credit - Corporate credit facilities and warehouse credit facilities are used to finance operations and purchase participation rights in bank-originated loans[154] | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Total senior debt, net | $287,998 | $318,758 | | Total revolving lines of credit | $287,998 | $288,828 | | Term loan, net | — | $29,930 | | Total borrowing capacity | $525,000 | $525,000 | CRITICAL ACCOUNTING ESTIMATES There have been no material changes to the critical accounting estimates previously disclosed in the 2024 Annual Report - No material changes to critical accounting estimates from the 2024 Annual Report[155] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, OppFi is not required to provide quantitative and qualitative disclosures about market risk - As a 'smaller reporting company,' OppFi is exempt from providing quantitative and qualitative disclosures about market risk[156] ITEM 4. CONTROLS AND PROCEDURES Management, with the CEO and CFO's participation, concluded that OppFi's disclosure controls and procedures were effective as of March 31, 2025. No material changes occurred in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that OppFi's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025 - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[157] Changes in Internal Control Over Financial Reporting There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[158] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity security sales, and other disclosures for the reporting period ITEM 1. LEGAL PROCEEDINGS This section refers to the detailed discussion of legal contingencies provided in Note 13 to the Consolidated Financial Statements - Legal proceedings information is cross-referenced to Note 13 of the Consolidated Financial Statements[160] ITEM 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report - No material changes to the Risk Factors from the 2024 Annual Report[161] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS OppFi's Board authorized a $20.0 million share repurchase program in April 2024, with $16.4 million remaining available as of March 31, 2025. No repurchase activity occurred during the first quarter of 2025 - The Board authorized a $20.0 million share repurchase program in April 2024, expiring in April 2027[162] - No repurchase activity occurred during Q1 2025[162] - As of March 31, 2025, $16.4 million of the repurchase authorization remained available[162] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities during the reporting period - No defaults upon senior securities[163] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to OppFi Inc - Mine Safety Disclosures are not applicable to the company[164] ITEM 5. OTHER INFORMATION The company's CFO, Pamela Johnson, and Board member, Greg Zeeman, adopted Rule 10b5-1 trading plans in March 2025 for the sale of Class A Common Stock, with sales scheduled to begin in June 2025 - CFO Pamela Johnson adopted a Rule 10b5-1 Trading Plan on March 10, 2025, to sell up to 55,270 shares of Class A Common Stock between June 2025 and March 2026[165] - Board member Greg Zeeman adopted a Rule 10b5-1 Trading Plan on March 11, 2025, to sell up to 50,000 shares of Class A Common Stock between June 2025 and April 2026[166] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including credit agreements, certifications, and XBRL-related documents - Exhibits include Second Amended and Restated Revolving Credit Agreement, Amendment No. 5 to Revolving Credit Agreement, and various certifications (CEO, CFO)[168] Signatures The report is duly signed on behalf of OppFi Inc. by Pamela D. Johnson, Chief Financial Officer, on May 8, 2025 - The report was signed by Pamela D. Johnson, Chief Financial Officer, on May 8, 2025[172][173]