Oportun Financial (OPRT) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights Overview of Q2 2025 Performance Oportun achieved GAAP profitability for the third consecutive quarter in Q2 2025, significantly improving net income and raising full-year Adjusted EPS guidance Q2 2025 Financial Performance Highlights | Metric | 2Q25 GAAP | 2Q24 GAAP | 2Q25 Adjusted | 2Q24 Adjusted | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $234M | $250M | - | - | | Net income (loss) | $6.9M | $(31)M | $15M | $3.2M | | Diluted EPS | $0.14 | $(0.78) | $0.31 | $0.08 | | Adjusted EBITDA | - | - | $31M | $30M | - The company achieved its third consecutive quarter of GAAP profitability, with a $38 million year-over-year improvement in net income and a $0.92 improvement in EPS[2][3] - Operating expenses were reduced by 13% year-over-year, contributing to margin expansion[2] - Full-year 2025 Adjusted EPS guidance was raised by 8% at the midpoint to a new range of $1.20 to $1.40, representing 67% to 94% growth over the previous year[2][3] - The company recently completed an ABS transaction at a significantly lower cost of capital, earning its first AAA rating[3] Financial and Operating Results Operational Drivers Q2 2025 saw 11% growth in Aggregate Originations and improved Risk Adjusted Net Interest Margin, despite declines in Portfolio Yield and Net Interest Margin Ratio - Aggregate Originations increased by 11% YoY to $481 million, with full-year 2025 growth expected to be in the 10% range[7] - Portfolio Yield decreased by 106 basis points YoY to 32.8%, primarily due to a higher rate of loan repayment[8] - Net Interest Margin Ratio decreased by 244 basis points YoY to 26.3% due to lower Portfolio Yield and higher cost of funds[9] - Risk Adjusted Net Interest Margin Ratio increased by 192 basis points YoY to 16.3%, driven by improved credit performance and favorable loan portfolio mark-to-market adjustments[10] Financial Results Q2 2025 saw a 6% decline in total revenue but a 74% surge in net revenue and a 13% reduction in operating expenses, leading to GAAP net income of $6.9 million Q2 2025 Key Financial Results | Financial Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $234M | $250M | -6% | | Net Revenue | $105M | $60M | +74% | | Operating Expense | $94M | $109M | -13% | | Net Income (Loss) | $6.9M | $(31)M | +$37.9M | | Adjusted Net Income | $15M | $3.2M | +369% | | Diluted EPS | $0.14 | $(0.78) | +$0.92 | | Adjusted EPS | $0.31 | $0.08 | +288% | - The company lowered its full-year 2025 GAAP operating expense forecast to approximately $380 million, down from a prior expectation of $390 million[12] - Adjusted EBITDA increased slightly to $31 million from $30 million in the prior-year quarter, driven by cost reductions and improved credit performance[15] Key Metrics and Business Updates Credit and Operating Metrics Q2 2025 saw continued improvement in credit quality with lower charge-off and delinquency rates, enhanced operational efficiency, and a significant recovery in profitability metrics Q2 2025 Credit and Operating Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Annualized Net Charge-Off Rate | 11.9% | 12.3% | -41 bps | | 30+ Day Delinquency Rate | 4.4% | 5.0% | -54 bps | | Operating Expense Ratio | 14.2% | 16.0% | -179 bps | | Return On Equity (ROE) | 7% | (34)% | +41 p.p. | | Adjusted ROE | 16% | 4% | +12 p.p. | - Dollar Net Charge-Offs declined 6% year-over-year, marking the seventh consecutive quarterly decrease[16] - The 30+ Day Delinquency Rate has now declined for six consecutive quarters[16] Secured Personal Loans The secured personal loan portfolio expanded to $195 million, demonstrating superior credit performance with 500 basis points lower losses and double the revenue per loan compared to unsecured loans - The secured personal loan receivables balance grew to $195 million (7% of owned principal) as of June 30, 2025, up from $123 million (5% of owned principal) in the prior year[20] - Secured personal loans exhibit significantly better credit performance, with losses approximately 500 basis points lower than unsecured loans in 2024[20] - These loans are expected to generate roughly double the revenue per loan compared to unsecured loans, driven by higher average loan sizes[20] Funding and Liquidity As of June 30, 2025, Oportun maintained a strong liquidity position with $228 million in cash and $618 million in undrawn warehouse capacity, despite an increase in the Cost of Debt Funding and Liquidity Metrics | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Cash | $228M | - | | Cost of Debt | 8.6% | 7.7% | | Debt-to-Equity | 7.3x | 7.9x | | Undrawn Warehouse Capacity | $618M | - | - The company's personal loan warehouse lines are committed through September 2027, April 2028, and August 2028, providing long-term funding stability[21] Financial Outlook for Third Quarter and Full Year 2025 Guidance Oportun provided Q3 and full-year 2025 guidance, projecting total revenue of $945-$960 million and raising full-year Adjusted EPS to $1.20-$1.40, while expecting GAAP profitability Q3 and Full Year 2025 Financial Guidance | Guidance | 3Q 2025 | Full Year 2025 | | :--- | :--- | :--- | | Total Revenue | $237 - $242M | $945 - $960M | | Annualized Net Charge-Off Rate | 11.8% +/- 15 bps | 11.9% +/- 30 bps | | Adjusted EBITDA | $34 - $39M | $135 - $145M | | Adjusted Net Income | — | $58 - $67M | | Adjusted EPS | — | $1.20 - $1.40 | | GAAP Net Income | — | GAAP Profitable | Financial Statements and Key Metrics Condensed Consolidated Statements of Operations Q2 2025 saw total revenue decline to $234.3 million, but net revenue increased to $104.6 million, leading to a net income of $6.9 million, a significant improvement from the prior year's loss Condensed Consolidated Statements of Operations (in millions) | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $234.3 | $250.4 | | Net revenue | $104.6 | $60.0 | | Total operating expenses | $94.4 | $109.2 | | Net income (loss) | $6.9 | $(31.0) | | Diluted Earnings (Loss) per Share | $0.14 | $(0.78) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets slightly decreased to $3.201 billion, while total liabilities also fell, leading to an increase in total stockholders' equity to $376.0 million Condensed Consolidated Balance Sheets (in millions) | (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $3,201.1 | $3,227.1 | | Loans receivable at fair value | $2,755.5 | $2,778.5 | | Total liabilities | $2,825.1 | $2,873.3 | | Total stockholders' equity | $376.0 | $353.8 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating activities provided $205.5 million in cash, resulting in a net increase of $13.6 million in cash and equivalents, ending at $228.2 million Condensed Consolidated Statements of Cash Flows (in millions) | (in millions) | Six Months Ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $205.5 | | Net cash used in investing activities | $(107.9) | | Net cash used in financing activities | $(84.0) | | Net increase in cash and cash equivalents | $13.6 | | Cash and cash equivalents end of period | $228.2 | Consolidated Key Performance Metrics Q2 2025 key performance metrics indicate positive trends with increased Aggregate Originations and improved credit quality, reflected in lower delinquency and charge-off rates Consolidated Key Performance Metrics (in millions, except percentages) | Key Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Aggregate Originations (Millions) | $480.8 | $434.8 | | Portfolio Yield (%) | 32.8% | 33.9% | | 30+ Day Delinquency Rate (%) | 4.4% | 5.0% | | Annualized Net Charge-Off Rate (%) | 11.9% | 12.3% | | Owned Principal Balance at End of Period (Millions) | $2,636.4 | $2,719.0 | Reconciliation of GAAP to Non-GAAP Financial Measures Definitions of Non-GAAP Measures Oportun utilizes non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Adjusted ROE to offer a clearer view of core business performance and facilitate period-to-period comparisons - Adjusted EBITDA is defined as net income adjusted for items such as income taxes, depreciation, stock-based compensation, certain interest expenses, non-recurring charges, and fair value adjustments[44][46] - Adjusted Net Income excludes the after-tax impact of non-cash stock-based compensation, certain non-recurring charges, and fair value adjustments on asset-backed notes[45][47] - Risk Adjusted Net Interest Margin is a metric designed to show the net margin on the loan portfolio after accounting for borrowing costs, credit losses, and fair value adjustments[49] Reconciliation Tables The reconciliation tables detail adjustments from GAAP Net Income of $6.9 million to derive Adjusted EBITDA of $31.2 million and Adjusted Net Income of $14.7 million for Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (Q2 2025, in millions) | Line Item | Amount | | :--- | :--- | | Net income (Loss) | $6.9 | | Income tax expense | $3.2 | | Interest on corporate financing | $9.4 | | Depreciation and amortization | $10.7 | | Stock-based compensation expense | $2.7 | | Other non-recurring charges | $4.0 | | Fair value mark-to-market adjustment | $(5.7) | | Adjusted EBITDA | $31.2 | Reconciliation of Net Income to Adjusted Net Income (Q2 2025, in millions) | Line Item | Amount | | :--- | :--- | | Net income (Loss) | $6.9 | | Income tax expense | $3.2 | | Stock-based compensation expense | $2.7 | | Other non-recurring charges | $4.0 | | Mark-to-market adjustment on ABS notes | $3.4 | | Adjusted income before taxes | $20.1 | | Normalized income tax expense | $(5.4) | | Adjusted Net Income | $14.7 |