Oportun Reports Fourth Quarter and Full Year 2023 Financial Results
- Total revenue for Oportun Financial Corporation in Q4 2023 was $263 million, contributing to a total of $1.1 billion for the full year 2023, marking an 11% growth compared to the previous year.
- Operating expenses saw a 15% decrease in the fourth quarter, and the company announced an additional $30 million in operating expense reductions.
- Oportun completed a $200 million asset-backed securitization deal in February, achieving pricing 160 bps lower than a transaction in October.
- Full Year 2024 guidance indicates expectations for significantly improved profitability for Oportun.
- Adjusted EBITDA for the company was $6.1 million in Q4 2023.
- None.
Insights
The reported financial metrics from Oportun Financial Corporation indicate a robust performance in terms of revenue growth, with an 11% year-over-year increase. This growth trajectory is commendable in the current economic climate and suggests that the company has successfully navigated market challenges. The decrease in quarterly operating expenses by 15% is a strong indicator of effective cost management strategies being implemented, which is crucial for improving profitability.
However, the net income figures present a significant loss, which raises concerns about the company's bottom line despite top-line growth. This could be attributed to one-time charges or underlying issues that need to be addressed. The announced $30 million in operating expense reductions further signals a strategic shift towards cost optimization, which could be beneficial for long-term profitability but may also have implications for the company's operational capabilities.
The $200 million asset-backed securitization deal completed at a substantially lower pricing than the previous transaction reflects positively on investor confidence and the company's creditworthiness. This financial maneuver not only provides immediate capital but also reduces interest expenses, contributing to future earnings potential.
Oportun's focus on three differentiated core products—unsecured personal loans, secured personal loans and savings—suggests a strategic pivot to diversify and strengthen its portfolio. This approach could mitigate risks associated with market fluctuations and consumer credit behavior. The emphasis on quality of originations under a tightened credit posture indicates a prudent risk management strategy, which is crucial in maintaining a healthy loan book, especially in uncertain economic times.
The full year 2024 guidance projecting markedly improved profitability is a positive signal to the market, indicating management's confidence in the company's strategic direction. However, investors should closely monitor the execution of the cost reduction plans and their impact on the company's growth prospects and service quality.
The financial results from Oportun Financial Corporation must be contextualized within the broader economic environment. The company's performance, particularly the revenue increase in a period of potential economic tightening, indicates resilience in the consumer finance sector. The asset-backed securitization deal's success at lower pricing points to a favorable debt market condition for quality borrowers, which could have broader implications for the credit market.
Yet, the substantial net losses reported may reflect broader economic pressures such as increased default rates or competitive dynamics impacting profitability. The forward-looking statements about improved profitability in 2024 suggest that the company anticipates a favorable shift in these conditions or the realization of significant efficiencies from their cost reduction strategies. Stakeholders should consider these factors when assessing the company's future performance in the context of potential economic headwinds.
4Q23 Total revenue of
Quarterly operating expense down
Full Year 2024 guidance reflects expectations for markedly improved profitability
SAN CARLOS, Calif., March 12, 2024 (GLOBE NEWSWIRE) -- Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun”, or the "Company") today reported financial results for the fourth quarter and full year ended December 31, 2023.
"We executed well during the fourth quarter and met each of our guidance metrics," said Raul Vazquez, CEO of Oportun. "Our top-line remained resilient and we completed full year 2023 with a record
Fourth Quarter and Full Year 2023 Results
| Metric | GAAP | Adjusted1 | |||||||||||||||||||||||
| 4Q23 | 4Q22 | FY23 | FY22 | 4Q23 | 4Q22 | FY23 | FY22 | ||||||||||||||||||
| Total revenue | $ | 263 | $ | 262 | $ | 1,057 | $ | 953 | |||||||||||||||||
| Net income (loss) | ($ | 42 | ) | $ | (8.4 | ) | ($ | 180 | ) | ($ | 78 | ) | ($ | 21 | ) | $ | 4.6 | $ | (124 | ) | $ | 69 | |||
| Diluted EPS | ($ | 1.09 | ) | $ | (0.25 | ) | ($ | 4.88 | ) | $ | (2.37 | ) | ($ | 0.54 | ) | $ | 0.14 | ($ | 3.37 | ) | $ | 2.09 | |||
| Adjusted EBITDA | $ | 6.1 | $ | (34 | ) | $ | 1.7 | $ | (10 | ) | |||||||||||||||
| Dollars in millions, except per share amounts. | |||||||||||||||||||||||||
| 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 non-GAAP to GAAP measures. | |||||||||||||||||||||||||
Fourth Quarter 2023
- Members were 2.2 million, an increase of
18% compared to the prior-year quarter - Products were 2.4 million, an increase of
19% compared to the prior-year quarter - Aggregate Originations were
$437 million , down28% compared to the prior-year quarter - Portfolio Yield was
32.7% , an increase of 100 basis points compared to the prior-year quarter - Managed Principal Balance at End of Period was
$3.2 billion , down7% compared to the prior-year quarter - Annualized Net Charge-Off Rate of
12.3% as compared to12.8% for the prior-year quarter - 30+ Day Delinquency Rate of
5.9% as compared to5.6% for the prior-year quarter
Full Year 2023
- Aggregate Originations were
$1.8 billion , down38% year-over-year - Portfolio Yield was
32.2% , an increase of 23 basis points year-over-year - Managed Principal Balance at End of Period was
$3.2 billion , down7% year-over-year - Annualized Net Charge-Off Rate of
12.2% as compared to10.1% for the prior-year period
Financial and Operating Results
All figures are as of or for the quarter ended December 31, 2023, unless otherwise noted.
Operational Drivers
Members – Members as of the end of the fourth quarter grew to 2.2 million, up
Products – Products as of the end of the fourth quarter grew to 2.4 million, up
Originations – Aggregate Originations for the fourth quarter were
Portfolio Yield – Portfolio Yield as of the end of fourth quarter was
Fourth Quarter 2023 Financial Results
Revenue – Total revenue for the fourth quarter was
Operating Expenses and Adjusted Operating Expenses – For the fourth quarter, total operating expense 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, were both
Adjusted EBITDA – Adjusted EBITDA was
Full Year 2023 Financial Results
Revenue – Total revenue for the full year was
Operating Expenses and Adjusted Operating Expenses – For the full year, total operating expense 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, were both
Adjusted EBITDA – Adjusted EBITDA was
Credit and Operating Metrics
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
Return on Equity ("ROE") and Adjusted ROE – ROE for the fourth quarter was (39)%, compared to (6.1)% in the prior-year quarter. Adjusted ROE for the fourth quarter was (19)%, compared to
Other Products
Secured personal loans – As of December 31, 2023, the Company had a secured personal loan receivables balance of
Credit card receivables – As of December 31, 2023, the Company had a credit card receivables balance of
Funding and Liquidity
As of December 31, 2023, cash and cash equivalents were
On October 20, 2023, the Company borrowed
On November 2, 2023, the Company entered into a forward flow whole loan sale agreement with an institutional investor. Pursuant to the agreement, the Company is expected to sell up to
Financial Outlook for First Quarter and Full Year 2024
Oportun is providing the following guidance for 1Q 2024 and full year 2024 as follows:
| 1Q 2024 | Full Year 2024 | ||
| Total Revenue | |||
| Annualized Net Charge-Off Rate | |||
| Adjusted EBITDA1 | |||
| 1 See the section entitled “About Non-GAAP Financial Measures” for an explanation of non-GAAP measures, including revised Adjusted EBITDA, and the table entitled “Reconciliation of Forward Looking Non-GAAP Financial Measures” for a reconciliation of non-GAAP to GAAP measures. | |||
Conference Call
As previously announced, Oportun’s management will host a conference call to discuss fourth quarter 2023 results at 5:00 p.m. ET (2:00 p.m. PT) today. A live webcast of the call will be accessible from the Investor Relations page of Oportun's website at https://investor.oportun.com. The dial-in number for the conference call is 1-866-604-1698 (toll-free) or 1-201-389-0844 (international). Participants should call in 10 minutes prior to the scheduled start time. Both the call and webcast are open to the general public. For those unable to listen to the live broadcast, a webcast replay of the call 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.
About Non-GAAP Financial Measures
This press release presents information about the Company’s Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA, Adjusted Operating Efficiency, Adjusted Operating Expense and Adjusted ROE, 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 mission-driven fintech that puts its 2.2 million members' financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, Oportun empowers members with the confidence to build a better financial future. Since inception, Oportun has provided more than
Forward-Looking Statements
This press release contains forward-looking statements. 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. All statements other than statements of historical fact contained in this press release, including statements as to future performance, results of operations and financial position; statements related to the effectiveness of the Company’s cost reduction measures and the impacts on the Company's business; the anticipated size, timing and effectiveness of operational efficiencies and expense reductions; strategic options regarding our credit card portfolio; our planned products and services; the ability to access diverse sources of capital; the Company's expectations regarding the sale of certain personal loan originations; achievement of the Company's strategic priorities and goals; the Company's expectations regarding macroeconomic conditions; the Company's profitability and future growth opportunities; the Company's expectations regarding the effect of tightening its underwriting standards on credit outcomes and the effect of fair value mark-to-market adjustments on its loan portfolio and asset-backed notes; the Company's first quarter and full year 2024 outlook; the Company's expectations related to future profitability on an adjusted basis, and the plans and objectives of management for our future operations, are forward-looking statements. These statements can be generally identified by terms such as “expect,” “plan,” “goal,” “target,” “anticipate,” “assume,” “predict,” “project,” “outlook,” “continue,” “due,” “may,” “believe,” “seek,” 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 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. Oportun has based these forward-looking statements on its current expectations and projections about future events, financial trends and risks and uncertainties 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 annual report on Form 10-K, and include, but are not limited to, Oportun's ability to retain existing members and attract new members; Oportun's ability to accurately predict demand for, and develop its financial products and services; the effectiveness of Oportun's A.I. model; macroeconomic conditions, including rising inflation and market interest rates; increases in loan non-payments, delinquencies and charge-offs; Oportun's ability to increase market share and enter into new markets; Oportun's ability to realize the benefits from acquisitions and integrate acquired technologies; the risk of security breaches or incidents affecting the Company's information technology systems or those of the Company's third-party vendors or service providers; Oportun’s ability to successfully offer loans in additional states; Oportun’s ability to compete successfully with other companies that are currently in, or may in the future enter, its industry; changes in Oportun's ability to obtain additional financing on acceptable terms or at all; and Oportun's potential need to seek additional strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, or reducing or delaying its business activities. These 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.
Oportun and the Oportun logo are registered trademarks of Oportun, Inc.
| Oportun Financial Corporation CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share data, unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Interest income | $ | 242.2 | $ | 244.1 | $ | 963.5 | $ | 876.1 | ||||||||
| Non-interest income | 20.5 | 17.8 | 93.4 | 76.4 | ||||||||||||
| Total revenue | 262.6 | 261.9 | 1,056.9 | 952.5 | ||||||||||||
| Less: | ||||||||||||||||
| Interest expense | 52.0 | 35.6 | 179.4 | 93.0 | ||||||||||||
| Net decrease in fair value | (138.5 | ) | (82.9 | ) | (596.8 | ) | (218.8 | ) | ||||||||
| Net revenue | 72.1 | 143.4 | 280.7 | 640.7 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Technology and facilities | 54.8 | 58.0 | 219.4 | 216.1 | ||||||||||||
| Sales and marketing | 18.1 | 21.3 | 75.3 | 110.0 | ||||||||||||
| Personnel | 25.1 | 40.3 | 121.8 | 154.9 | ||||||||||||
| Outsourcing and professional fees | 11.2 | 17.5 | 45.4 | 67.6 | ||||||||||||
| General, administrative and other | 20.2 | 14.1 | 72.4 | 58.8 | ||||||||||||
| Goodwill impairment | — | — | — | 108.5 | ||||||||||||
| Total operating expenses | 129.4 | 151.4 | 534.3 | 715.9 | ||||||||||||
| Income (loss) before taxes | (57.3 | ) | (7.9 | ) | (253.7 | ) | (75.3 | ) | ||||||||
| Income tax expense (benefit) | (15.5 | ) | 0.5 | (73.7 | ) | 2.5 | ||||||||||
| Net loss | $ | (41.8 | ) | $ | (8.4 | ) | $ | (180.0 | ) | $ | (77.7 | ) | ||||
| Diluted Earnings (Loss) per Common Share | $ | (1.09 | ) | $ | (0.25 | ) | $ | (4.88 | ) | $ | (2.37 | ) | ||||
| Diluted Weighted Average Common Shares | 38,485,406 | 33,231,661 | 36,875,950 | 32,825,772 | ||||||||||||
Note: Numbers may not foot or cross-foot due to rounding.
| Oportun Financial Corporation CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 91.2 | $ | 98.8 | ||||
| Restricted cash | 114.8 | 105.0 | ||||||
| Loans receivable at fair value | 2,962.4 | 3,175.4 | ||||||
| Capitalized software and other intangibles | 114.7 | 139.8 | ||||||
| Right of use assets - operating | 21.1 | 30.4 | ||||||
| Other assets | 107.7 | 64.2 | ||||||
| Total assets | $ | 3,411.9 | $ | 3,613.7 | ||||
| Liabilities and stockholders' equity | ||||||||
| Liabilities | ||||||||
| Secured financing | $ | 290.0 | $ | 317.6 | ||||
| Asset-backed notes at fair value | 1,780.0 | 2,387.7 | ||||||
| Asset-backed borrowings at amortized cost | 581.5 | — | ||||||
| Acquisition and corporate financing | 258.7 | 222.9 | ||||||
| Lease liabilities | 28.4 | 37.9 | ||||||
| Other liabilities | 68.9 | 100.0 | ||||||
| Total liabilities | 3,007.5 | 3,066.1 | ||||||
| Stockholders' equity | ||||||||
| Common stock | — | — | ||||||
| Common stock, additional paid-in capital | 584.6 | 547.8 | ||||||
| Retained earnings (accumulated deficit) | (173.8 | ) | 6.1 | |||||
| Treasury stock | (6.3 | ) | (6.3 | ) | ||||
| Total stockholders’ equity | 404.4 | 547.6 | ||||||
| Total liabilities and stockholders' equity | $ | 3,411.9 | $ | 3,613.7 | ||||
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, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Cash flows from operating activities | |||||||||||||||
| Net loss | $ | (41.8 | ) | $ | (8.4 | ) | $ | (180.0 | ) | $ | (77.7 | ) | |||
| Adjustments for non-cash items | 139.0 | 91.7 | 585.3 | 400.3 | |||||||||||
| Proceeds from sale of loans in excess of originations of loans sold and held for sale | 2.9 | (0.1 | ) | 8.5 | 6.1 | ||||||||||
| Changes in balances of operating assets and liabilities | 6.2 | 5.3 | (21.1 | ) | (80.7 | ) | |||||||||
| Net cash provided by operating activities | 106.3 | 88.5 | 392.8 | 247.9 | |||||||||||
| Cash flows from investing activities | |||||||||||||||
| Net loan principal repayments (loan originations) | (91.8 | ) | (242.4 | ) | (257.5 | ) | (1,365.9 | ) | |||||||
| Proceeds from loan sales originated as held for investment | 1.3 | 1.3 | 4.1 | 249.3 | |||||||||||
| Capitalization of system development costs | (6.1 | ) | (12.1 | ) | (31.3 | ) | (48.9 | ) | |||||||
| Other, net | (0.2 | ) | (2.6 | ) | (1.4 | ) | (6.0 | ) | |||||||
| Net cash used in investing activities | (96.8 | ) | (255.7 | ) | (286.2 | ) | (1,171.5 | ) | |||||||
| Cash flows from financing activities | |||||||||||||||
| Borrowings | 429.4 | 579.2 | 945.5 | 3,234.1 | |||||||||||
| Repayments | (432.1 | ) | (480.1 | ) | (1,047.1 | ) | (2,290.9 | ) | |||||||
| Net stock-based activities | (0.4 | ) | (0.4 | ) | (2.7 | ) | (8.7 | ) | |||||||
| Net cash provided by (used in) financing activities | (3.1 | ) | 98.7 | (104.4 | ) | 934.5 | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 6.4 | (68.4 | ) | 2.2 | 10.9 | ||||||||||
| Cash and cash equivalents and restricted cash beginning of period | 199.6 | 272.2 | 203.8 | 193.0 | |||||||||||
| Cash and cash equivalents and restricted cash end of period | $ | 206.0 | $ | 203.8 | $ | 206.0 | $ | 203.8 | |||||||
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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Members (Actuals) | 2,224,302 | 1,877,260 | 2,224,302 | 1,877,260 | ||||||||||||
| Products (Actuals) | 2,387,745 | 2,006,245 | 2,387,745 | 2,006,245 | ||||||||||||
| Aggregate Originations (Millions) | $ | 437.3 | $ | 610.4 | $ | 1,813.1 | $ | 2,922.9 | ||||||||
| Portfolio Yield (%) | 32.7 | % | 31.7 | % | 32.2 | % | 32.0 | % | ||||||||
| 30+ Day Delinquency Rate (%) | 5.9 | % | 5.6 | % | 5.9 | % | 5.6 | % | ||||||||
| Annualized Net Charge-Off Rate (%) | 12.3 | % | 12.8 | % | 12.2 | % | 10.1 | % | ||||||||
| Return on Equity (%) | (39.2 | )% | (6.1 | )% | (37.8 | )% | (13.5 | )% | ||||||||
| Adjusted Return on Equity (%) | (19.3 | )% | 3.3 | % | (26.1 | )% | 12.1 | % | ||||||||
| Oportun Financial Corporation OTHER METRICS (unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Managed Principal Balance at End of Period (Millions) | $ | 3,182.1 | $ | 3,407.0 | $ | 3,182.1 | $ | 3,407.0 | ||||||||
| Owned Principal Balance at End of Period (Millions) | $ | 2,904.7 | $ | 3,098.6 | $ | 2,904.7 | $ | 3,098.6 | ||||||||
| Average Daily Principal Balance (Millions) | $ | 2,940.5 | $ | 3,058.3 | $ | 2,992.6 | $ | 2,740.3 | ||||||||
Note: Numbers may not foot or cross-foot due to rounding.
| Oportun Financial Corporation ABOUT NON-GAAP FINANCIAL MEASURES (unaudited) |
This press release dated March 12, 2024 contains non-GAAP financial measures. The following tables reconcile the non-GAAP financial measures in this press release to the most directly comparable financial measures prepared in accordance with GAAP.
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.
Adjusted EBITDA
The Company defines Adjusted EBITDA as net income, adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted EBITDA is an important measure because it allows 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, 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 believes it is useful to exclude the impact of interest expense associated with the Company's corporate financing facilities, as it views this expense as related to its capital structure rather than its funding.
- The Company excludes the impact of certain non-recurring charges, such as expenses associated with our workforce optimization, acquisition and integration related expenses and other non-recurring charges because it does not believe that these items reflect ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our corporate financing facilities.
- The Company also reverses origination fees for Loans Receivable at Fair Value, net. 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.
Revised Adjusted EBITDA
Beginning in 2024, we will transition to an updated definition of Adjusted EBITDA which better represents how management views the results of operations and makes management decisions. Reconciliations of non-GAAP to GAAP measures, updated definitions of reconciling items, and comparative calculations for 2022 and 2023 for Adjusted EBITDA using the new definition can be found below.
| Adjusted EBITDA | Rationale for Change |
| Interest on Corporate Financing | We have updated the interest on corporate financing adjustment to include interest on our acquisition related financing previously included within the adjustment for acquisition and integration related expenses. |
| Depreciation and amortization | We have updated the adjustment related to depreciation and amortization to include the amortization of acquired intangibles. This amortization was previously included within the adjustment for acquisition and integration related expenses. |
| Acquisition and integration related expenses | We have removed the adjustment related to acquisition and integration related expenses. Interest expense related to our acquisition related financing has been reclassified to the adjustment for corporate financing. Amortization of acquired intangibles has been reclassified to depreciation and amortization. |
| Origination fees for loans receivable at fair value, net | We have removed the adjustment related to origination fees for loans receivable at fair value, net as we believe this better aligns with common practices within our industry. |
Adjusted Net Income
The Company defines Adjusted Net Income as net income 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 the Company'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 certain non-recurring charges.
- 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 certain non-recurring charges, such as expenses associated with our workforce optimization, acquisition and integration related expenses and other non-recurring charges because it does not believe that these items reflect its ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our Corporate Financing facility.
- The Company believes it is useful to exclude stock-based compensation expense because it is a non-cash charge.
Revised Adjusted Net Income (Loss)
Beginning in 2024, we will transition to an updated definition of Adjusted Net Income (Loss) which better represents how management views the results of operations and makes management decisions. Reconciliations of non-GAAP to GAAP measures, updated definitions of reconciling items, and comparative calculations for 2022 and 2023 for Adjusted Net Income (Loss) using the new definitions can be found below.
| Adjusted Net Income (Loss) | Rationale for Change |
| Acquisition and integration related expenses | We have removed the adjustment related to acquisition and integration related expenses. Interest expense related to our acquisition related financing has been reclassified to the adjustment for Corporate Financing. Amortization of acquired intangibles has been reclassified to depreciation and amortization. |
| Fair value mark-to-market adjustment on Asset-Backed Notes at Fair Value | We have added an adjustment to exclude the Fair value mark-to-market adjustments related to Asset-Backed Notes at Fair Value. This adjustment aligns with our decision in 2023 to stop electing the fair value option for new debt financings. By the end of 2025 nearly all our existing Asset-Backed Notes at Fair Value will have paid down to zero, so after that there will be no mark-to-market adjustment for our debt. |
Adjusted Operating Efficiency and Adjusted Operating Expense
The Company defines Adjusted Operating Efficiency as Adjusted Operating Expense divided by total revenue. The Company defines Adjusted Operating Expense as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges, such as expenses associated with our workforce optimization, acquisition and integration related expenses and other non-recurring charges. Other non-recurring charges include litigation reserve, impairment charges, and debt amendment costs related to our Corporate Financing facility. The Company believes Adjusted Operating Efficiency is an important measure because it allows management, investors and Oportun's board of directors to evaluate how efficiently the Company is managing costs relative to revenue. The Company believes Adjusted Operating Expense is an important measure because it allows management, investors and Oportun's board of directors to evaluate and compare its operating costs from period to period, excluding the impact of non-cash, stock-based compensation expense and certain non-recurring charges.
Adjusted Return on Equity
The Company defines Adjusted Return on Equity (“ROE”) as annualized Adjusted Net Income divided by average stockholders’ equity. Average stockholders’ equity is an average of the beginning and ending stockholders’ equity balance for each period. The Company believes Adjusted ROE is an important measure because it allows management, investors and its board of directors to evaluate the profitability of the business in relation to its stockholders' equity and how efficiently it generates income from stockholders' equity.
Adjusted EPS
The Company defines Adjusted EPS as Adjusted Net Income divided by weighted average diluted shares outstanding.
| Oportun Financial Corporation RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, unaudited) | ||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| Adjusted EBITDA | 2023 | 2022 | ||||||||||||||
| Reported | Revised | Reported | Revised | |||||||||||||
| Net income (loss) | $ | (41.8 | ) | $ | (41.8 | ) | $ | (8.4 | ) | $ | (8.4 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income tax expense (benefit) | (15.5 | ) | (15.5 | ) | 0.5 | 0.5 | ||||||||||
| Interest on corporate financing (1) | 11.2 | 14.6 | 5.1 | 8.5 | ||||||||||||
| Depreciation and amortization | 10.8 | 13.8 | 9.9 | 12.9 | ||||||||||||
| Stock-based compensation expense | 4.8 | 4.8 | 6.9 | 6.9 | ||||||||||||
| Workforce optimization expenses | 6.8 | 6.8 | — | — | ||||||||||||
| Acquisition and integration related expenses | 6.6 | — | 7.3 | 0.9 | ||||||||||||
| Other non-recurring charges (1) | 10.8 | 10.8 | — | — | ||||||||||||
| Origination fees for Loans Receivable at Fair Value, net | (4.0 | ) | — | (9.1 | ) | — | ||||||||||
| Fair value mark-to-market adjustment | 16.4 | 16.4 | (45.6 | ) | (45.6 | ) | ||||||||||
| Adjusted EBITDA | $ | 6.1 | $ | 9.9 | $ | (33.5 | ) | $ | (24.4 | ) | ||||||
| Twelve Months Ended December 31, | ||||||||||||||||
| Adjusted EBITDA | 2023 | 2022 | ||||||||||||||
| Reported | Revised | Reported | Revised | |||||||||||||
| Net income (loss) | $ | (180.0 | ) | $ | (180.0 | ) | $ | (77.7 | ) | $ | (77.7 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income tax expense (benefit) | (73.7 | ) | (73.7 | ) | 2.5 | 2.5 | ||||||||||
| Interest on corporate financing (1) | 37.7 | 51.8 | 6.0 | 17.6 | ||||||||||||
| Depreciation and amortization | 43.0 | 54.9 | 35.2 | 47.4 | ||||||||||||
| Stock-based compensation expense | 18.0 | 18.0 | 27.6 | 27.6 | ||||||||||||
| Workforce optimization expenses | 22.5 | 22.5 | 1.9 | 1.9 | ||||||||||||
| Acquisition and integration related expenses | 27.6 | — | 29.7 | 5.8 | ||||||||||||
| Other non-recurring charges (1) | 15.5 | 15.5 | 111.2 | 111.2 | ||||||||||||
| Origination fees for Loans Receivable at Fair Value, net | (18.5 | ) | — | (26.8 | ) | — | ||||||||||
| Fair value mark-to-market adjustment | 109.5 | 109.5 | (119.7 | ) | (119.7 | ) | ||||||||||
| Adjusted EBITDA | $ | 1.7 | $ | 18.6 | $ | (10.3 | ) | $ | 16.6 | |||||||
| Three Months Ended December 31, | ||||||||||||||||
| Adjusted Net Income | 2023 | 2022 | ||||||||||||||
| Reported | Revised | Reported | Revised | |||||||||||||
| Net income (loss) | $ | (41.8 | ) | $ | (41.8 | ) | $ | (8.4 | ) | $ | (8.4 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income tax expense (benefit) | (15.5 | ) | (15.5 | ) | 0.5 | 0.5 | ||||||||||
| Stock-based compensation expense | 4.8 | 4.8 | 6.9 | 6.9 | ||||||||||||
| Workforce optimization expenses | 6.8 | 6.8 | — | — | ||||||||||||
| Acquisition and integration related expenses | 6.6 | — | 7.3 | 0.9 | ||||||||||||
| Other non-recurring charges (1) | 10.8 | 10.8 | — | — | ||||||||||||
| Mark-to-market adjustment on ABS notes | — | 23.6 | — | (21.0 | ) | |||||||||||
| Adjusted income before taxes | (28.3 | ) | (11.3 | ) | 6.3 | (21.1 | ) | |||||||||
| Normalized income tax expense | (7.6 | ) | (3.0 | ) | 1.7 | (5.7 | ) | |||||||||
| Adjusted Net Income | $ | (20.6 | ) | $ | (8.2 | ) | $ | 4.6 | $ | (15.4 | ) | |||||
| Twelve Months Ended December 31, | ||||||||||||||||
| Adjusted Net Income | 2023 | 2022 | ||||||||||||||
| Reported | Revised | Reported | Revised | |||||||||||||
| Net income (loss) | $ | (180.0 | ) | $ | (180.0 | ) | $ | (77.7 | ) | $ | (77.7 | ) | ||||
| Adjustments: | ||||||||||||||||
| Income tax expense (benefit) | (73.7 | ) | (73.7 | ) | 2.5 | 2.5 | ||||||||||
| Stock-based compensation expense | 18.0 | 18.0 | 27.6 | 27.6 | ||||||||||||
| Workforce optimization expenses | 22.5 | 22.5 | 1.9 | 1.9 | ||||||||||||
| Acquisition and integration related expenses | 27.6 | — | 29.7 | 5.8 | ||||||||||||
| Other non-recurring charges (1) | 15.5 | 15.5 | 111.2 | 111.2 | ||||||||||||
| Mark-to-market adjustment on ABS notes | — | 100.0 | — | (184.9 | ) | |||||||||||
| Adjusted income before taxes | (170.0 | ) | (97.7 | ) | 95.1 | (113.6 | ) | |||||||||
| Normalized income tax expense | (45.9 | ) | (26.4 | ) | 25.7 | (30.7 | ) | |||||||||
| Adjusted Net Income | $ | (124.1 | ) | $ | (71.3 | ) | $ | 69.4 | $ | (82.9 | ) | |||||
Note: Numbers may not foot or cross-foot due to rounding.
(1) Certain prior-period financial information has been reclassified to conform to current period presentation.
| Oportun Financial Corporation RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| Adjusted Operating Efficiency | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Operating Efficiency | 49.3 | % | 57.8 | % | 50.6 | % | 75.2 | % | ||||||||
| Total Revenue | $ | 262.6 | $ | 261.9 | $ | 1,056.9 | $ | 952.5 | ||||||||
| Total Operating Expense | $ | 129.4 | $ | 151.4 | $ | 534.3 | $ | 715.9 | ||||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation expense | (4.8 | ) | (6.9 | ) | (18.0 | ) | (27.6 | ) | ||||||||
| Workforce optimization expenses | (6.8 | ) | — | (22.5 | ) | (1.9 | ) | |||||||||
| Acquisition and integration related expenses | (6.6 | ) | (7.3 | ) | (27.6 | ) | (29.7 | ) | ||||||||
| Other non-recurring charges (1) | (10.5 | ) | — | (14.4 | ) | (111.2 | ) | |||||||||
| Total Adjusted Operating Expense | $ | 100.7 | $ | 137.2 | $ | 451.8 | $ | 545.5 | ||||||||
| Adjusted Operating Efficiency | 38.4 | % | 52.4 | % | 42.7 | % | 57.3 | % | ||||||||
Note: Numbers may not foot or cross-foot due to rounding.
(1) Certain prior-period financial information has been reclassified to conform to current period presentation.
| 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 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net income (loss) | $ | (41.8 | ) | $ | (8.4 | ) | $ | (180.0 | ) | $ | (77.7 | ) | ||||
| Net income (loss) attributable to common stockholders | $ | (41.8 | ) | $ | (8.4 | ) | $ | (180.0 | ) | $ | (77.7 | ) | ||||
| Basic weighted-average common shares outstanding | 38,485,406 | 33,231,661 | 36,875,950 | 32,825,772 | ||||||||||||
| Weighted average effect of dilutive securities: | ||||||||||||||||
| Stock options | — | — | — | — | ||||||||||||
| Restricted stock units | — | — | — | — | ||||||||||||
| Diluted weighted-average common shares outstanding | 38,485,406 | 33,231,661 | 36,875,950 | 32,825,772 | ||||||||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | (1.09 | ) | $ | (0.25 | ) | $ | (4.88 | ) | $ | (2.37 | ) | ||||
| Diluted | $ | (1.09 | ) | $ | (0.25 | ) | $ | (4.88 | ) | $ | (2.37 | ) | ||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| Adjusted Earnings (loss) Per Share | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Diluted earnings (loss) per share | $ | (1.09 | ) | $ | (0.25 | ) | $ | (4.88 | ) | $ | (2.37 | ) | ||||
| Adjusted Net Income | $ | (20.6 | ) | $ | 4.6 | $ | (124.1 | ) | $ | 69.4 | ||||||
| Basic weighted-average common shares outstanding | 38,485,406 | 33,231,661 | 36,875,950 | 32,825,772 | ||||||||||||
| Weighted average effect of dilutive securities: | ||||||||||||||||
| Stock options | — | 29,322 | — | 252,357 | ||||||||||||
| Restricted stock units | — | 66,569 | — | 173,092 | ||||||||||||
| Diluted adjusted weighted-average common shares outstanding | 38,485,406 | 33,327,552 | 36,875,950 | 33,251,221 | ||||||||||||
| Adjusted Earnings (loss) Per Share | $ | (0.54 | ) | $ | 0.14 | $ | (3.37 | ) | $ | 2.09 | ||||||
Note: Numbers may not foot or cross-foot due to rounding.
| Oportun Financial Corporation RECONCILIATION OF FORWARD LOOKING NON-GAAP FINANCIAL MEASURES (in millions, unaudited) | |||||||||||||||||
| 1Q 2024 | FY 2024 | ||||||||||||||||
| Low | High | Low | High | ||||||||||||||
| Adjusted EBITDA | |||||||||||||||||
| Net (loss)* | $ | (35.8 | ) | * | $ | (34.2 | ) | * | $ | (54.2 | ) | * | $ | (46.3 | ) | * | |
| Adjustments: | |||||||||||||||||
| Income tax expense (benefit) | (14.7 | ) | (14.3 | ) | (12.9 | ) | (10.8 | ) | |||||||||
| Interest on corporate financing | 13.4 | 13.4 | 48.7 | 48.7 | |||||||||||||
| Depreciation and amortization | 13.3 | 13.3 | 50.9 | 50.9 | |||||||||||||
| Stock-based compensation expense | 5.4 | 5.4 | 18.5 | 18.5 | |||||||||||||
| Workforce optimization expenses | 0.8 | 0.8 | 0.8 | 0.8 | |||||||||||||
| Other non-recurring charges | 3.6 | 3.6 | 8.2 | 8.2 | |||||||||||||
| Fair value mark-to-market adjustment* | * | * | * | * | |||||||||||||
| Adjusted EBITDA | $ | (14.0 | ) | $ | (12.0 | ) | $ | 60.0 | $ | 70.0 | |||||||
* Due to the uncertainty in macroeconomic conditions, we are unable to precisely forecast the fair value mark-to-market adjustments on our loan portfolio and asset-backed notes. As a result, while we fully expect there to be a fair value mark-to-market adjustment which could have an impact on GAAP net income (loss), the net income (loss) number shown above assumes no change in the fair value mark-to-market adjustment.
Note: Numbers may not foot or cross-foot due to rounding.
FAQ
What was Oportun Financial Corporation's total revenue for Q4 2023?
How much did Oportun Financial Corporation's total revenue grow year-over-year for full year 2023?
What percentage decrease was observed in operating expenses for Oportun Financial Corporation in Q4 2023?
What additional operating expense reductions were announced by Oportun Financial Corporation?
When did Oportun Financial Corporation complete a $200 million ABS deal?
What pricing advantage did Oportun Financial Corporation achieve in the February ABS deal compared to a previous transaction?
What does the Full Year 2024 guidance suggest for Oportun Financial Corporation?
What was Oportun Financial Corporation's Adjusted EBITDA in Q4 2023?
