Findell Capital Management LLC Applauds Oportun (OPRT) in Announcing Cost Savings Measures

Rhea-AI Summary

Findell Capital Management applauds Oportun in announcing cost savings measures

Positive

• Oportun (Nasdaq: OPRT) announced an additional reduction in overhead costs of $78-83 mm, complementing their prior cuts of $48-53mm. These cost cuts demonstrate OPRT's willingness to address concerns and potentially generate significant earnings. The cost cuts envisaged so far (~$130mm) should get OPRT to an operating expenditure base below $500mm by 2024, allowing them to generate +$3 in EPS that year. Today's share price reaction demonstrates the market's receptiveness to these efforts and OPRT's renewed focus on its specialty lending business.

Negative

• Concerns remain about the possibility of a return to fintech growth initiatives and continued spending in that area. Management should eliminate this spending to ensure a full pivot back towards managing costs and focusing on specialty lending. Additionally, the board should consider compensating management based on metrics like return on tangible common equity and operating expenses thresholds.

NEW YORK, May 9, 2023 /PRNewswire/ -- On May 8th, 2023, Oportun (Nasdaq: OPRT) reported financial results for the first quarter ending March 31, 2023. In their press release, OPRT announced an additional reduction in overhead costs of $78-83 mm, which complements their prior announced cuts of $48-53mm.

These cost cuts demonstrate that OPRT's board and management team were willing to constructively read our letter and listen to our concerns and the concerns of other shareholders. We applaud them for taking this step in the right direction.

As stated in our original letter (see here), OPRT has the potential to generate significant earnings should the cost structure be right-sized. The cost cuts envisaged so far (~$130mm) should get OPRT to an operating expenditure base below $500mm by 2024, which would allow OPRT to generate +$3 in EPS that year.

While we are heartened to see this pivot, we remain concerned that the company is still leaving open the possibility of a return to fintech growth initiatives as evidenced by continued spending in the area. We would implore management to entirely eliminate this spending and not ramp it back up at the first sign of economic improvement.

We believe that to ensure a full pivot back towards managing costs and focusing on specialty lending, the board should not be compensating management on metrics like adjusted EBITDA, but on metrics like return on tangible common equity. We would additionally like to see management judged on how well they keep operating expenses below certain thresholds and the long-term share price performance.

Today's share price reaction demonstrates the market's receptiveness to these cost-cutting efforts and OPRT's renewed focus on its core specialty lending business.

Further efforts in this direction will be further rewarded by the market and will more importantly ensure a bright future for OPRT.

Brian A Finn
CIO
Findell Capital Management LLC

Contact: info@findell.us

View original content:https://www.prnewswire.com/news-releases/findell-capital-management-llc-applauds-oportun-oprt-in-announcing-cost-savings-measures-301820045.html

SOURCE Findell Capital Management, LLC

FAQ

What cost savings measures did Oportun announce?

Oportun announced an additional reduction in overhead costs of $78-83 mm, complementing their prior cuts of $48-53mm.

What is the potential impact of these cost cuts on Oportun's earnings?

The cost cuts envisaged so far (~$130mm) should get OPRT to an operating expenditure base below $500mm by 2024, allowing them to generate +$3 in EPS that year.

What concerns does Findell Capital Management have about Oportun's spending?

Findell Capital Management is concerned about the possibility of a return to fintech growth initiatives and continued spending in that area.

What metrics does Findell Capital Management suggest management be compensated on?

Findell Capital Management suggests that management be compensated based on metrics like return on tangible common equity and operating expenses thresholds.

How did the market react to Oportun's cost-cutting efforts?

Today's share price reaction demonstrates the market's receptiveness to these efforts and OPRT's renewed focus on its specialty lending business.