Oportun Reports Fourth Quarter 2020 Results
Oportun Financial Corporation (Nasdaq: OPRT) reported Q4 and full year 2020 results showing a net income of $8.5 million or $0.29 per diluted share, down from $23.2 million in Q4 2019. Total revenue fell to $140.8 million from $165.3 million year-over-year, attributed to lower loan originations amid pandemic-induced economic uncertainties. Retail location closures are planned, with 136 locations to be shut down, focusing on digital growth. The Annualized Net Charge-Off Rate increased to 9.4% in Q4, partly due to pandemic impacts. The company hasn’t provided a financial outlook, citing ongoing uncertainties.
- Adjusted Net Income for Q4 2020 was $17.5 million, up 320% sequentially.
- 30+ Day Delinquency Rate improved to 3.7%, down from 4.0% year-over-year.
- Total revenue declined by 15% year-over-year to $140.8 million.
- Net loss of $45.1 million for full-year 2020, compared to a net income of $61.6 million in 2019.
- Annualized Net Charge-Off Rate increased to 9.8%, up from 8.3% in the prior year.
Net Income of
Adjusted Net Income of
SAN CARLOS, Calif., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun” and the "Company") today reported financial results for the fourth quarter and full year ended December 31, 2020.
“Oportun capped off a challenging 2020 with solid fourth quarter results and momentum heading into 2021,” said Raul Vazquez, CEO of Oportun. “The fundamentals of our business remain strong, and we have identified areas to substantially expand our opportunities for future growth and greater operating efficiency. Our focused commitment to enhancing our digital capabilities enables us to drive more capital-efficient growth, which I am confident will generate greater value for our customers and our shareholders.”
Fourth Quarter and Full Year 2020 Results
| Metric | GAAP | Adjusted1 | |||||||||||||||
| 4Q20 | 4Q19 | FY20 | FY19 | 4Q20 | 4Q19 | FY20 | FY19 | ||||||||||
| Total revenue | |||||||||||||||||
| Net income (loss) | ( | ( | |||||||||||||||
| Diluted EPS | ( | ( | |||||||||||||||
| Adjusted EBITDA | |||||||||||||||||
Dollars in millions, except per share amounts.
Fourth Quarter 2020
- Aggregate Originations were
$448.6 million , up48% sequentially over prior-quarter and down28% year-over-year - Managed Principal Balance at End of Period was
$1.9 billion , up3% sequentially over prior-quarter and down14% year-over-year - 30+ Day Delinquency Rate of
3.7% as compared to4.0% for the prior-year period - Annualized Net Charge-Off Rate of
9.4% as compared to9.0% for the prior-year period
Full Year 2020
- Annualized Net Charge-Off Rate of
9.8% as compared to8.3% for the prior year - Aggregate Originations were
$1.3 billion , down34% year-over-year - Managed Principal Balance at End of Period was
$1.9 billion , down14% year-over-year
Retail Network Optimization
In an email to employees posted on the company’s blog today, Oportun’s CEO, Raul Vazquez, announced that the Company intends to close 136 of its retail locations. This decision was based upon the success of Oportun's investments in its mobile channel and digital marketing, and the Company expects it can continue to serve its existing customer base and more rapidly scale to new customers with a more capital efficient retail footprint. To illustrate the success of its digital initiatives, the Company disclosed that in the fourth quarter of 2020,
| 1 See the section entitled “About Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of GAAP to non-GAAP measures. | ||||
Financial and Operating Results
To facilitate useful measures for period-to-period comparisons of its business, the Company has provided below unaudited financial information for the three- and twelve-month periods ended December 31, 2020 and 2019 on a GAAP basis as well as a Fair Value Pro Forma (“FVPF”) Adjusted basis. The FVPF and adjusted financial results reflect the Company's performance as if the fair value option had been elected since inception for all loans originated and held for investment and all asset-backed notes issued. All figures are as of December 31, 2020, unless otherwise noted.
Fourth Quarter 2020 Financial Results
Total Revenue and FVPF Total Revenue – Total revenue and FVPF Total Revenue for the fourth quarter was
Net Income (Loss) and Adjusted Net Income (Loss) – Net income was
Earnings (Loss) Per Share and Adjusted EPS – GAAP earnings per share, basic and diluted, were
Adjusted EBITDA – Adjusted EBITDA was
Full Year 2020 Financial Results
Total Revenue and FVPF Total Revenue – Total revenue and FVPF Total Revenue for the full year was
Net Income (Loss) and Adjusted Net Income (Loss) – Net loss was
Earnings (Loss) Per Share and Adjusted EPS – GAAP net loss per share, basic and diluted, was
Adjusted EBITDA – Adjusted EBITDA was
Origination Trends
Originations for the fourth quarter were
Credit and Operating Metrics
The Company believes that its rapid implementation of emergency hardship programs and reduced payment plans has been effective in providing impacted customers sufficient time to return to repayment status. As of December 31, 2020,
Net Charge-Off Rate – The Annualized Net Charge-Off Rate for the fourth quarter was
30+ Day Delinquency Rate – 30+ Day Delinquency Rate was
Operating Efficiency and Adjusted Operating Efficiency – Operating Efficiency for the fourth quarter was
Operating Efficiency for the year was
Book Value and Adjusted Tangible Book Value – Book Value at December 31, 2020 was
Return on Equity ("ROE") and Adjusted ROE – ROE for the fourth quarter was
ROE for the year was (9.4)%, as compared to
Funding and Liquidity
As of December 31, 2020, cash and cash equivalents were
Based upon its recent projections, Oportun has determined it continues to have more than 12 months of liquidity runway.(1) The Company’s balance sheet is characterized by relatively low leverage. Oportun’s term securitizations and its warehouse line are non-recourse to Oportun Financial Corporation and its operating subsidiaries. The Company’s term securitizations allow it to fund new loan originations for the remainder of each securitization’s revolving period; the revolving periods have end dates which range from March 2021 to July 2022. Oportun also continues to sell a percentage of newly originated loans on a whole loan basis at a fixed price pursuant to existing flow sale contracts.
Financial Outlook
Because of the ongoing uncertainties related to the pandemic and the likelihood of continued government stimulus, the Company is not providing financial guidance at this time. The Company anticipates its future financial performance will continue to be impacted by the COVID-19 pandemic and its economic consequences, but the magnitude and timing of this impact is too dependent on external factors to reliably set guidance parameters at this time.
Conference Call
As previously announced, Oportun’s management will host a conference call to discuss fourth quarter and full year 2020 results at 5:00 p.m. EST (2:00 p.m. PST) today. The dial-in number for the conference call is 877-407-9208 (toll-free) or 201-493-6784 (international). Participants should call in 10 minutes prior to the scheduled start time. A live webcast of the call will be accessible from the Investor Relations page of Oportun's website at https://investor.oportun.com. Both the call and webcast are open to the general public. For those unable to listen to the live broadcast, a webcast replay will be available at https://investor.oportun.com for one year. An investor presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures, will be available on the Investor Relations page of Oportun's website at https://investor.oportun.com prior to the start of the conference call.
| 1 As of December 31, 2020, assumes maintaining operations and covering all upcoming debt obligations. | ||||
About Non-GAAP Financial Measures
This press release presents information about the Company’s Fair Value Pro Forma ("FVPF") results, FVPF Total Revenue, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Tangible Book Value, Adjusted Tangible Book Value Per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Efficiency, and Adjusted Return on Equity, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes these Non-GAAP measures can be useful measures for period-to-period comparisons of its core business and provide useful information to investors and others in understanding and evaluating its operating results. Non-GAAP financial measures are provided in addition to, and not as a substitute for, and are not superior to, financial measures calculated in accordance with GAAP. In addition, the non-GAAP measures the Company uses, as presented, may not be comparable to similar measures used by other companies. Reconciliations of non-GAAP to GAAP measures can be found below.
About Oportun
Oportun (Nasdaq: OPRT) is a financial services company that leverages its digital platform to provide responsible consumer credit to hardworking people. Using A.I.-driven models that are built on 15 years of proprietary customer insights and billions of unique data points, Oportun has extended more than
Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements as to future results of operations and financial position, liquidity runway, trends in credit performance, originations, payment defaults, business strategy and plans and objectives of management for future operations of Oportun are forward-looking statements. These statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause Oportun’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You generally can identify these statements by terms such as “expect,” “plan,” “anticipate,” “project,” "outlook,” “continue,” “may,” “believe,” or “estimate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Oportun has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These risks and uncertainties include those risks described in Oportun's filings with the Securities and Exchange Commission, including Oportun's most recent quarterly report on Form 10-Q and the annual report on Form 10-K that will be filed for the year ended December 31, 2020, and include, but are not limited to, the extent and duration of the COVID-19 pandemic, market and economic disruptions stemming from the COVID-19 pandemic; Oportun’s future financial performance, including trends in revenue, net revenue, operating expenses, and net income; changes in market interest rates; increases in loan delinquencies and charge-offs; Oportun's ability to increase the volume of loans it makes; Oportun’s ability to successfully offer loans in additional states; and Oportun’s ability to compete successfully with other companies that are currently in, or may in the future enter, its industry. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, Oportun disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
Contacts
Investor Contact
Nils Erdmann
650-810-9074
ir@oportun.com
Media Contact
Usher Lieberman
650-769-9414
usher.lieberman@oportun.com
Oportun and the Oportun logo are registered trademarks of Oportun, Inc.
Oportun Financial Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share data, unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| Interest income | $ | 129.9 | $ | 148.3 | $ | 545.5 | $ | 544.1 | ||||||||||||
| Non-interest income | 10.9 | 17.0 | 38.3 | 56.0 | ||||||||||||||||
| Total revenue | 140.8 | 165.3 | 583.7 | 600.1 | ||||||||||||||||
| Less: | ||||||||||||||||||||
| Interest expense | 13.5 | 15.8 | 58.4 | 60.5 | ||||||||||||||||
| Provision (release) for loan losses | — | (0.7 | ) | — | (4.5 | ) | ||||||||||||||
| Decrease in fair value | (12.7 | ) | (18.7 | ) | (190.3 | ) | (97.2 | ) | ||||||||||||
| Net revenue | 114.6 | 131.6 | 335.1 | 446.8 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Technology and facilities | 35.9 | 29.1 | 129.8 | 102.0 | ||||||||||||||||
| Sales and marketing | 23.9 | 28.1 | 89.4 | 97.2 | ||||||||||||||||
| Personnel | 26.5 | 24.2 | 106.4 | 90.6 | ||||||||||||||||
| Outsourcing and professional fees | 10.8 | 14.4 | 47.1 | 57.2 | ||||||||||||||||
| General, administrative and other | 2.9 | 4.6 | 20.5 | 15.4 | ||||||||||||||||
| Total operating expenses | 100.0 | 100.5 | 393.2 | 362.4 | ||||||||||||||||
| Income (loss) before taxes | 14.7 | 31.2 | (58.1 | ) | 84.4 | |||||||||||||||
| Income tax expense (benefit) | 6.2 | 8.0 | (13.0 | ) | 22.8 | |||||||||||||||
| Net income (loss) | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 61.6 | |||||||||||
| Diluted Earnings (Loss) per Common Share | $ | 0.29 | $ | 0.81 | $ | (1.65 | ) | $ | 0.40 | |||||||||||
| Diluted Weighted Average Common Shares | 29,225,393 | 28,526,725 | 27,333,271 | 10,761,852 | ||||||||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
| December 31, | December 31, | |||||||||
| 2020 | 2019 | |||||||||
| Assets | ||||||||||
| Cash and cash equivalents | $ | 136.2 | $ | 72.2 | ||||||
| Restricted cash | 32.4 | 64.0 | ||||||||
| Loans receivable at fair value | 1,696.5 | 1,882.1 | ||||||||
| Loans receivable at amortized cost | — | 42.5 | ||||||||
| Less: | ||||||||||
| Unamortized deferred origination costs and fees, net | — | (0.1 | ) | |||||||
| Allowance for loan losses | — | (4.0 | ) | |||||||
| Loans receivable at amortized cost, net | — | 38.5 | ||||||||
| Loans held for sale | 1.2 | 0.7 | ||||||||
| Interest and fees receivable, net | 15.4 | 17.2 | ||||||||
| Right of use assets - operating | 46.8 | 50.5 | ||||||||
| Other assets | 80.5 | 76.8 | ||||||||
| Total assets | $ | 2,009.1 | $ | 2,201.9 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Liabilities | ||||||||||
| Secured financing | $ | 246.4 | $ | 60.9 | ||||||
| Asset-backed notes at fair value | 1,167.3 | 1,129.2 | ||||||||
| Asset-backed notes at amortized cost | — | 359.1 | ||||||||
| Amount due to whole loan buyer | 6.8 | 33.4 | ||||||||
| Lease liabilities | 49.7 | 53.4 | ||||||||
| Other liabilities | 72.5 | 77.2 | ||||||||
| Total liabilities | 1,542.7 | 1,713.1 | ||||||||
| Stockholders' equity | ||||||||||
| Common stock | — | — | ||||||||
| Common stock, additional paid-in capital | 436.5 | 418.3 | ||||||||
| Convertible preferred and common stock warrants | — | 0.1 | ||||||||
| Accumulated other comprehensive loss | (0.3 | ) | (0.2 | ) | ||||||
| Retained earnings | 36.4 | 76.7 | ||||||||
| Treasury stock | (6.3 | ) | (6.1 | ) | ||||||
| Total stockholders’ equity | 466.4 | 488.8 | ||||||||
| Total liabilities and stockholders' equity | $ | 2,009.1 | $ | 2,201.9 | ||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Cash flows from operating activities | |||||||||||||||||||
| Net income (loss) | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 61.6 | ||||||||||
| Adjustments for non-cash items | 19.7 | 22.0 | 212.3 | 105.9 | |||||||||||||||
| Proceeds from sale of loans in excess of originations of loans sold and held for sale | 6.8 | 14.7 | 19.9 | 35.8 | |||||||||||||||
| Changes in balances of operating assets and liabilities | (21.6 | ) | (8.8 | ) | (34.3 | ) | 15.1 | ||||||||||||
| Net cash provided by operating activities | 13.4 | 51.1 | 152.9 | 218.4 | |||||||||||||||
| Cash flows from investing activities | |||||||||||||||||||
| Net loan principal repayments (loan originations) | (96.5 | ) | (189.0 | ) | 43.0 | (471.5 | ) | ||||||||||||
| Purchase of fixed assets, net of sales | (1.2 | ) | (3.1 | ) | (4.8 | ) | (8.9 | ) | |||||||||||
| Capitalization of system development costs | (5.3 | ) | (5.6 | ) | (21.8 | ) | (17.3 | ) | |||||||||||
| Net cash provided by (used in) investing activities | (103.0 | ) | (197.7 | ) | 16.4 | (497.7 | ) | ||||||||||||
| Cash flows from financing activities | |||||||||||||||||||
| Borrowings | 95.2 | 62.0 | 509.2 | 394.0 | |||||||||||||||
| Repayments | — | (0.2 | ) | (644.0 | ) | (169.3 | ) | ||||||||||||
| Net stock-based activities | (0.6 | ) | 0.5 | (2.0 | ) | 61.6 | |||||||||||||
| Net cash provided by (used in) financing activities | 94.7 | 62.3 | (136.8 | ) | 286.3 | ||||||||||||||
| Net increase in cash and cash equivalents and restricted cash | 5.1 | (84.3 | ) | 32.5 | 7.0 | ||||||||||||||
| Cash and cash equivalents and restricted cash beginning of period | 163.5 | 220.4 | 136.1 | 129.2 | |||||||||||||||
| Cash and cash equivalents and restricted cash end of period | $ | 168.6 | $ | 136.1 | $ | 168.6 | $ | 136.1 | |||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
CONSOLIDATED KEY PERFORMANCE METRICS
(unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Aggregate Originations (Millions) | $ | 448.6 | $ | 619.3 | $ | 1,348.0 | $ | 2,051.8 | |||||||||
| Number of loans originated (Actuals) | 153,847 | 213,840 | 449,362 | 726,964 | |||||||||||||
| Active Customers (Actuals) | 651,600 | 793,254 | 651,600 | 793,254 | |||||||||||||
| Customer Acquisition Costs (Actuals) | $ | 155 | $ | 131 | $ | 199 | $ | 134 | |||||||||
| Owned Principal Balance at End of Period (Millions) | $ | 1,639.6 | $ | 1,842.9 | $ | 1,639.6 | $ | 1,842.9 | |||||||||
| Managed Principal Balance at End of Period (Millions) | $ | 1,895.4 | $ | 2,199.0 | $ | 1,895.4 | $ | 2,199.0 | |||||||||
| Average Daily Principal Balance (Millions) | $ | 1,605.5 | $ | 1,769.2 | $ | 1,701.7 | $ | 1,624.3 | |||||||||
| Charge-offs, net of recoveries (Millions) | $ | 37.8 | $ | 40.2 | $ | 166.9 | $ | 134.8 | |||||||||
| 30+ delinquent balance at end of period (Millions) | $ | 60.1 | $ | 73.9 | $ | 60.1 | $ | 73.9 | |||||||||
| 30+ Day Delinquency Rate (%) | 3.7 | % | 4.0 | % | 3.7 | % | 4.0 | % | |||||||||
| Annualized Net Charge-Off Rate (%) | 9.4 | % | 9.0 | % | 9.8 | % | 8.3 | % | |||||||||
| Operating Efficiency (%) | 71.0 | % | 60.8 | % | 67.4 | % | 60.4 | % | |||||||||
| Adjusted Operating Efficiency (%) | 64.3 | % | 57.8 | % | 61.1 | % | 57.2 | % | |||||||||
| Return on Equity (%) | 7.4 | % | 19.5 | % | (9.4 | ) | % | 14.7 | % | ||||||||
| Adjusted Return on Equity (%) | 15.2 | % | 22.8 | % | (3.0 | ) | % | 14.9 | % | ||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
ABOUT NON-GAAP FINANCIAL MEASURES
(unaudited)
The press release dated February 18, 2021 contains non-GAAP financial measures. The following tables reconcile the non-GAAP financial measures in that press release to the most directly comparable financial measures prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures include FVPF Total Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Operating Efficiency, Adjusted Return on Equity, Adjusted EPS, Adjusted Tangible Book Value and Adjusted Tangible Book Value Per Share.
The Company believes that the provision of these non-GAAP financial measures can provide useful measures for period-to-period comparisons of Oportun's core business and useful information to investors and others in understanding and evaluating its operating results. However, non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.
Fair Value Pro Forma
Oportun has elected the fair value option to account for all loans held for investment that were originated on or after January 1, 2018, (the "Fair Value Loans"), and for all asset-backed notes issued on or after January 1, 2018, (the "Fair Value Notes"). The Company made this election because, for a fast-growing company that produces high-quality assets such as Oportun, fair value accounting brings its GAAP net income closer to the net cash flow generated by its business, and more in line with its more mature public peers. In order to facilitate comparisons to prior periods, the Company has provided financial information for the three months ended December 31, 2020 and for prior periods on a pro forma basis, or the Fair Value Pro Forma, as if the fair value option had been elected since inception for all loans originated and held for investment and all asset-backed notes issued. Upon adoption of ASU 2019-05 effective January 1, 2020, the Company elected the fair value option on all loans receivable previously measured at amortized cost.
Adjusted EBITDA and Adjusted EBITDA Margin
The Company defines Adjusted EBITDA as net income (loss), adjusted for the impact of the Company's election of the fair value option and further adjusted to eliminate the effect of certain items as described below. The Company defines Adjusted EBITDA Margin as Adjusted EBITDA divided by FVPF Total Revenue. The Company believes that Adjusted EBITDA and Adjusted EBITDA Margin are important measures because they allow management, investors and its board of directors to evaluate and compare operating results, including return on capital and operating efficiencies, from period to period by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of Oportun's business, as it removes the effect of income taxes, certain non-cash items, variable charges and timing differences.
- The Company believes it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations.
- The Company believes it is useful to exclude depreciation and amortization and stock-based compensation expense because they are non-cash charges.
- The Company excludes the impact of COVID-19 expenses, impairment charges and litigation reserve because it does not believe that these items reflect ongoing business operations.
- The Company also reverses origination fees for Fair Value Loans, net. As a result of the Company's election of the fair value option for Fair Value Loans, the Company recognizes the full amount of any origination fees as revenue at the time of loan disbursement in advance of collection of origination fees through principal payments. As a result, the Company believes it is beneficial to exclude the uncollected portion of such origination fees, because such amounts do not represent cash received.
- The Company also reverses the fair value mark-to-market adjustment because it is a non-cash adjustment.
Adjusted Net Income (Loss)
The Company defines Adjusted Net Income (Loss) as net income (loss) adjusted for the impact of the Company's election of the fair value option and further adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and Oportun's board of directors to evaluate and compare its operating results, including return on capital and operating efficiencies, from period to period, excluding the after-tax impact of non-cash, stock-based compensation expense and one-time, non-recurring items such as litigation reserves.
- The Company believes it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. The Company also includes the impact of normalized income tax expense by applying a normalized statutory tax rate.
- The Company believes it is useful to exclude the impact of COVID-19 expenses, impairment charges and litigation reserve because it does not believe that these items reflect its ongoing business operations.
- The Company believes it is useful to exclude stock-based compensation expense because it is a non-cash charge.
Adjusted Operating Efficiency
The Company defines Adjusted Operating Efficiency as total Fair Value Pro Forma operating expenses (excluding COVID-19 expenses, stock-based compensation expense, impairment charges and litigation reserve) divided by Fair Value Pro Forma Total Revenue. The Company believes Adjusted Operating Efficiency is an important measure because it allows management, investors and Oportun's board of directors to evaluate how efficient the Company is at managing costs relative to revenue.
Adjusted Return on Equity
The Company defines Adjusted Return on Equity (“ROE”) as annualized Adjusted Net Income divided by Fair Value Pro Forma average shareholders’ equity. The Company believes Adjusted ROE is an important measure because it allows management, investors and Oportun's board of directors to evaluate the profitability of the business in relation to equity and how well the Company generates income from the equity available.
Adjusted EPS
The Company defines Adjusted EPS as Adjusted Net Income divided by weighted average diluted shares outstanding. Weighted-average diluted common shares outstanding have been adjusted to reflect the conversion of all convertible preferred shares as of the beginning of each annual period.
Adjusted Tangible Book Value and Adjusted Tangible Book Value Per Share ("Adjusted TBVPS")
The Company defines Adjusted Tangible Book Value as Fair Value Pro Forma total stockholders' equity, excluding intangible assets and system development costs, and Adjusted TBVPS as Adjusted Tangible Book Value divided by common shares outstanding at period end. The Company believes that Adjusted TBVPS is an important measure because it provides management, investors and its Board with an assessment of value that is more conservative than Book Value Per Share in order to evaluate the financial position, capitalization, and valuation of the business in relation to total shares outstanding at the end of the period. The Company believes it is important to exclude intangibles, as these would not have standalone value outside the context of the business.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
| Three Months Ended December 31, 2020 | Three Months Ended December 31, 2019 | ||||||||||||||||||||||||||||
| As Reported | FV Adjustments | FV Pro Forma | As Reported | FV Adjustments | FV Pro Forma | ||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||
| Interest income | $ | 129.9 | $ | — | $ | 129.9 | $ | 148.3 | $ | (0.2 | ) | $ | 148.2 | ||||||||||||||||
| Non-interest income | 10.9 | — | 10.9 | 17.0 | — | $ | 17.0 | ||||||||||||||||||||||
| Total revenue | 140.8 | — | 140.8 | 165.3 | (0.2 | ) | 165.2 | ||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Interest expense | 13.5 | — | 13.5 | 15.8 | (0.4 | ) | 15.4 | ||||||||||||||||||||||
| Provision (release) for loan losses | — | — | — | (0.7 | ) | 0.7 | — | ||||||||||||||||||||||
| Net decrease in fair value | (12.7 | ) | — | (12.7 | ) | (18.7 | ) | 0.7 | (18.0 | ) | |||||||||||||||||||
| Net revenue | 114.6 | — | 114.6 | 131.6 | 0.2 | 131.8 | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||
| Technology and facilities | 35.9 | — | 35.9 | 29.1 | — | 29.1 | |||||||||||||||||||||||
| Sales and marketing | 23.9 | — | 23.9 | 28.1 | — | 28.1 | |||||||||||||||||||||||
| Personnel | 26.5 | — | 26.5 | 24.2 | — | 24.2 | |||||||||||||||||||||||
| Outsourcing and professional fees | 10.8 | — | 10.8 | 14.4 | — | 14.4 | |||||||||||||||||||||||
| General, administrative and other | 2.9 | — | 2.9 | 4.6 | — | 4.6 | |||||||||||||||||||||||
| Total operating expenses | 100.0 | — | 100.0 | 100.5 | — | 100.5 | |||||||||||||||||||||||
| Income before taxes | 14.7 | — | 14.7 | 31.2 | 0.2 | 31.3 | |||||||||||||||||||||||
| Income tax expense | 6.2 | — | 6.2 | 8.0 | — | 8.0 | |||||||||||||||||||||||
| Net income (loss) | $ | 8.5 | $ | — | $ | 8.5 | $ | 23.2 | $ | 0.1 | $ | 23.3 | |||||||||||||||||
| Adjusted Earnings (Loss) per Common Share | $ | 0.60 | $ | 0.94 | |||||||||||||||||||||||||
| Diluted Adjusted Weighted Average Common Shares | 29,225,393 | 28,526,725 | |||||||||||||||||||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
| Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||||||||||||
| As Reported | FV Adjustments | FV Pro Forma | As Reported | FV Adjustments | FV Pro Forma | |||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||
| Interest income | $ | 545.5 | $ | — | $ | 545.5 | $ | 544.1 | $ | (1.8 | ) | $ | 542.4 | |||||||||||||||||
| Non-interest income | 38.3 | — | 38.3 | 56.0 | — | 56.0 | ||||||||||||||||||||||||
| Total revenue | 583.7 | — | 583.7 | 600.1 | (1.8 | ) | 598.4 | |||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||
| Interest expense | 58.4 | (0.9 | ) | 57.5 | 60.5 | (1.4 | ) | 59.1 | ||||||||||||||||||||||
| Provision (release) for loan losses | — | — | — | (4.5 | ) | 4.5 | — | |||||||||||||||||||||||
| Net decrease in fair value | (190.3 | ) | 0.7 | (189.6 | ) | (97.2 | ) | (13.4 | ) | (110.6 | ) | |||||||||||||||||||
| Net revenue | 335.1 | 1.6 | 336.6 | 446.8 | (18.2 | ) | 428.7 | |||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||
| Technology and facilities | 129.8 | — | 129.8 | 102.0 | — | 102.0 | ||||||||||||||||||||||||
| Sales and marketing | 89.4 | — | 89.4 | 97.2 | — | 97.2 | ||||||||||||||||||||||||
| Personnel | 106.4 | — | 106.4 | 90.6 | — | 90.6 | ||||||||||||||||||||||||
| Outsourcing and professional fees | 47.1 | — | 47.1 | 57.2 | — | 57.2 | ||||||||||||||||||||||||
| General, administrative and other | 20.5 | — | 20.5 | 15.4 | — | 15.4 | ||||||||||||||||||||||||
| Total operating expenses | 393.2 | — | 393.2 | 362.4 | — | 362.4 | ||||||||||||||||||||||||
| Income (loss) before taxes | (58.1 | ) | 1.6 | (56.5 | ) | 84.4 | (18.2 | ) | 66.2 | |||||||||||||||||||||
| Income tax expense (benefit) | (13.0 | ) | 0.7 | (12.3 | ) | 22.8 | (5.0 | ) | 17.8 | |||||||||||||||||||||
| Net income | $ | (45.1 | ) | $ | 0.9 | $ | (44.2 | ) | $ | 61.6 | $ | (13.2 | ) | $ | 48.4 | |||||||||||||||
| Adjusted Earnings (Loss) per Common Share | $ | (0.52 | ) | $ | 2.53 | |||||||||||||||||||||||||
| Diluted Adjusted Weighted Average Common Shares | 27,333,271 | 24,767,605 | ||||||||||||||||||||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
| December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| As Reported | FV Adjustments | FV Pro Forma | As Reported | FV Adjustments | FV Pro Forma | |||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 136.2 | $ | — | $ | 136.2 | $ | 72.2 | $ | — | $ | 72.2 | ||||||||||||||
| Restricted cash | 32.4 | — | 32.4 | 64.0 | — | 64.0 | ||||||||||||||||||||
| Loans receivable | 1,696.5 | — | 1,696.5 | 1,920.6 | 5.0 | 1,925.6 | ||||||||||||||||||||
| Other assets | 143.9 | — | 143.9 | 145.2 | (6.6 | ) | 138.6 | |||||||||||||||||||
| Total assets | 2,009.1 | — | 2,009.1 | 2,201.9 | (1.6 | ) | 2,200.3 | |||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Total debt | 1,413.7 | — | 1,413.7 | 1,549.2 | 1.6 | 1,550.8 | ||||||||||||||||||||
| Other liabilities | 129.0 | 0.7 | 129.7 | 163.9 | (1.6 | ) | 162.3 | |||||||||||||||||||
| Total liabilities | 1,542.7 | 0.7 | 1,543.4 | 1,713.1 | (0.1 | ) | 1,713.0 | |||||||||||||||||||
| Total stockholders' equity | 466.4 | (0.7 | ) | 465.7 | 488.8 | (1.5 | ) | 487.3 | ||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,009.1 | $ | — | $ | 2,009.1 | $ | 2,201.9 | $ | (1.6 | ) | $ | 2,200.3 | |||||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
| Adjusted EBITDA | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Net income (loss) | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 61.6 | |||||||||||
| Adjustments: | ||||||||||||||||||||
| Fair Value Pro Forma net income adjustment | — | 0.1 | 0.9 | (13.2 | ) | |||||||||||||||
| Income tax expense (benefit) | 6.2 | 8.0 | (12.3 | ) | 17.8 | |||||||||||||||
| COVID-19 expenses | 0.6 | — | 4.6 | — | ||||||||||||||||
| Depreciation and amortization | 5.3 | 4.4 | 20.2 | 14.1 | ||||||||||||||||
| Impairment | 3.7 | — | 3.7 | — | ||||||||||||||||
| Stock-based compensation expense | 5.2 | 4.0 | 19.5 | 19.2 | ||||||||||||||||
| Litigation reserve | — | 0.9 | 8.8 | 0.9 | ||||||||||||||||
| Origination fees for Fair Value Loans, net | (4.4 | ) | (1.5 | ) | (0.9 | ) | (1.9 | ) | ||||||||||||
| Fair value mark-to-market adjustment | (25.1 | ) | (22.2 | ) | 22.7 | (24.2 | ) | |||||||||||||
| Adjusted EBITDA | $ | — | $ | 17.0 | $ | 22.1 | $ | 74.3 | ||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
| Adjusted Net Income (Loss) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Net income (loss) | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 61.6 | |||||||||||
| Adjustments: | ||||||||||||||||||||
| Fair Value Pro Forma net income adjustment | — | 0.1 | 0.9 | (13.2 | ) | |||||||||||||||
| Income tax expense (benefit) | 6.2 | 8.0 | (12.3 | ) | 17.8 | |||||||||||||||
| COVID-19 expenses | 0.6 | — | 4.6 | — | ||||||||||||||||
| Impairment | 3.7 | — | 3.7 | — | ||||||||||||||||
| Stock-based compensation expense | 5.2 | 4.0 | 19.5 | 19.2 | ||||||||||||||||
| Litigation reserve | — | 0.9 | 8.8 | 0.9 | ||||||||||||||||
| Adjusted income (loss) before taxes | 24.1 | 36.2 | (20.0 | ) | 86.3 | |||||||||||||||
| Normalized income tax expense (benefit) | 6.6 | 9.3 | (5.7 | ) | 23.5 | |||||||||||||||
| Adjusted Net Income (Loss) | $ | 17.5 | $ | 26.9 | $ | (14.2 | ) | $ | 62.8 | |||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except share and per share data, unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
| GAAP Earnings (Loss) per Share | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| Net income (loss) | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 61.6 | ||||||||||
| Less: Additional common stock issued to Series G shareholders | — | — | — | (37.5 | ) | ||||||||||||||
| Less: Net income allocated to participating securities (1) | — | — | — | (19.9 | ) | ||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 8.5 | $ | 23.2 | $ | (45.1 | ) | $ | 4.3 | ||||||||||
| Basic weighted-average common shares outstanding | 27,619,256 | 27,001,893 | 27,333,271 | 9,347,103 | |||||||||||||||
| Weighted average effect of dilutive securities: | |||||||||||||||||||
| Stock options | 1,253,453 | 1,104,961 | — | 1,300,758 | |||||||||||||||
| Restricted stock units | 352,684 | 406,684 | — | 101,671 | |||||||||||||||
| Warrants | — | 13,187 | — | 12,320 | |||||||||||||||
| Diluted weighted-average common shares outstanding | 29,225,393 | 28,526,725 | 27,333,271 | 10,761,852 | |||||||||||||||
| Earnings (loss) per share: | |||||||||||||||||||
| Basic | $ | 0.31 | $ | 0.86 | $ | (1.65 | ) | $ | 0.46 | ||||||||||
| Diluted | $ | 0.29 | $ | 0.81 | $ | (1.65 | ) | $ | 0.40 | ||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
| Adjusted Earnings (Loss) Per Share | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Diluted earnings (loss) per share | $ | 0.29 | $ | 0.81 | $ | (1.65 | ) | $ | 0.40 | |||||||||||
| Adjusted Net Income (Loss) | $ | 17.5 | $ | 26.9 | $ | (14.2 | ) | $ | 62.8 | |||||||||||
| Basic weighted-average common shares outstanding | 27,619,256 | 27,001,893 | 27,333,271 | 9,347,103 | ||||||||||||||||
| Weighted-average common shares outstanding based on assumed convertible preferred conversion | — | — | — | 14,005,753 | ||||||||||||||||
| Weighted average effect of dilutive securities: | ||||||||||||||||||||
| Stock options | 1,253,453 | 1,104,961 | — | 1,300,758 | ||||||||||||||||
| Restricted stock units | 352,684 | 406,684 | — | 101,671 | ||||||||||||||||
| Warrants | — | 13,187 | — | 12,320 | ||||||||||||||||
| Diluted adjusted weighted-average common shares outstanding | 29,225,393 | 28,526,725 | 27,333,271 | 24,767,605 | ||||||||||||||||
| Adjusted Earnings (Loss) Per Share | $ | 0.60 | $ | 0.94 | $ | (0.52 | ) | $ | 2.53 | |||||||||||
(1) In a period of net income, both earnings and dividends (if any) are allocated to participating securities. In a period of net loss, only dividends (if any) are allocated to participating securities.
Note: Numbers may not foot or cross-foot due to rounding.
Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except share and per share data, unaudited)
| December 31, 2020 | December 31, 2019 | |||||||||
| Adjusted Tangible Book Value and Adjusted Tangible Book Value Per Share | ||||||||||
| Stockholders' equity | $ | 466.4 | $ | 488.8 | ||||||
| Adjustments: | ||||||||||
| Fair Value Pro Forma stockholders' equity adjustment | (0.7 | ) | (1.5 | ) | ||||||
| Intangible assets, net (1) | (27.5 | ) | (18.5 | ) | ||||||
| Adjusted Tangible Book Value | $ | 438.2 | $ | 468.8 | ||||||
| Total common shares outstanding at end of period | 27,679,263 | 27,003,157 | ||||||||
| Book Value Per Share | $ | 16.85 | $ | 18.10 | ||||||
| Adjusted Tangible Book Value Per Share | $ | 15.83 | $ | 17.36 | ||||||
(1) Intangible assets, net consists of trademarks and internally developed software, net.
Note: Numbers may not foot or cross-foot due to rounding.
FAQ
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What is Oportun's net income for the full year 2020?
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