Hal Goetsch

Hal Goetsch of B. Riley Securities asked for more detail on Oportun Financial's expense reduction efforts in Q4 2023 and for the full year, and also inquired about the company's goals for corporate debt reduction in 2024.

Answer

Raul Vazquez, Chief Executive Officer of Oportun Financial, detailed a $49 million (12%) year-over-year reduction in full-year operating expenses, driven by contributions across technology and facilities (down $24 million), personnel (down $7 million), G&A (down $19 million), and outsourcing (down $2 million). He noted that these reductions allowed for a $4 million increase in sales and marketing investments, primarily in direct mail and customer referrals. For corporate debt reduction, Vazquez stated that paying down the 15% interest rate corporate facility remains a top priority after funding profitable growth, highlighting $70 million in payments made in 2023 and additional payments planned for 2024, which will impact GAAP profitability due to associated charges.

Hal Goetsch requested more detailed information on Oportun Financial's expense reduction strategies, particularly what contributed to the strong performance in Q4 2025, and inquired about the company's corporate debt reduction goals for 2026.

Answer

Raul Vazquez, Chief Executive Officer, detailed that full-year 2025 operating expenses decreased by $49 million or 12%, driven by contributions across all areas: a $24 million reduction in tech and facilities, a $7 million decrease in personnel, a $19 million drop in G&A, and a $2 million reduction in outsourcing. These savings allowed for a $4 million increase in sales and marketing. Regarding debt, he reiterated that paying down the 15% corporate debt facility is a top priority after funding profitable growth, noting $70 million in payments in 2025, with further aggressive payments planned for 2026.

Hal Goetsch of B. Riley Financial sought to confirm the number of loans originated in the quarter, which he noted implied a strategy of smaller loans to new borrowers, and asked about the mix of first-time borrowers.

Answer

CEO Raul Vazquez corrected his earlier figure, confirming 156,000 loans were originated. He affirmed the strategy is to focus on smaller loans to attract new borrowers who can become high-quality repeat customers, though he did not provide a specific percentage mix of new versus returning members for the quarter.

Hal Goetsch with B. Riley Securities questioned Sezzle's decision to tighten underwriting in Q4 2025, which led to better-than-anticipated provision for credit losses, and asked about the growth rate expectations for non-transaction operating expenses in 2026. He also sought clarification on why a banking charter is being pursued despite the existing WebBank partnership, and inquired about the upcoming Sezzle Mobile plan, including its origin, carrier partner, goals, and whether its impact is included in the 2026 forecast.

Answer

CEO Charlie Youakim explained that the tightening was a cautious response to market chatter about consumer health in late 2025, combined with new, higher-performing models, acknowledging that in hindsight, more GMV could have been pursued. CFO Lee Brading noted that non-transaction operating expenses are primarily driven by personnel (slight trend up) and marketing (pushed as long as 6-month payback is achieved). Charlie Youakim clarified that the ILC pursuit is a defense against state-level challenges to the Banking-as-a-Service model, future-proofing the company. He also confirmed Sezzle Mobile is not in the 2026 forecast, explaining its origin from a desire to help consumers save money on cellular bills (partnering with AT&T via an intermediary), viewing it as a potential 'home run' for consumers, and highlighting its potential for acquiring adjacent customers and as a strong retention tool.

Hal Goetsch asked about the decision to tighten underwriting in Q4 2025, leading to better-than-expected provision for credit losses, the significant year-over-year increase in non-transaction operating expenses in dollar terms, and the strategic rationale behind pursuing a banking charter despite the existing WebBank partnership.

Answer

CEO and Executive Chairman Charlie Youakim explained that underwriting was tightened due to market chatter about consumer health in Q3/Q4 2025 and the launch of new models, noting that the consumer proved healthier than anticipated. He suggested potential for opening up further in 2026 to drive GMV. CFO Lee Brading clarified that marketing spend, driven by a six-month payback strategy, was the primary factor for the increase in non-transaction operating expenses. Charlie Youakim added that while WebBank is a strong partner, a banking charter would future-proof Sezzle against state-level challenges to the Banking-as-a-Service model.

Hal Goetsch inquired about Sezzle's overarching strategy concerning the broader BNPL market in the United States, specifically its current size, growth trajectory, and the long-term potential for BNPL as a viable alternative to credit cards. He also requested comments on new key performance indicators related to shopper engagement, monthly active users, revenue-generating users, and monthly sessions, and how recent app features contribute to these growth metrics.

Answer

Charlie Youakim, Executive Chairman and CEO, articulated that BNPL represents a sustained, multi-year trend, as consumers increasingly favor it over credit cards due to its lower total cost of ownership, perceived safety, and its utility as a budgeting tool that discourages overspending. He underscored Sezzle's alignment with responsible spending, contrasting it with credit card models that often profit from revolving debt. Addressing engagement, Charlie detailed how new app features, including the Earn Tab, couponing, discounting, and price comparison, are designed to deliver value to middle-to-low-income and younger consumers, thereby boosting app activity, retention, and opportunities to introduce subscription products.

Hal Goetsch inquired about Sezzle's big-picture strategy and outlook on the Buy Now, Pay Later (BNPL) market in the United States, specifically its growth potential as a replacement for credit cards. He also asked for details on new shopping features and initiatives that are driving increased user engagement metrics like monthly active users and monthly sessions.

Answer

Executive Chairman and CEO Charlie Youakim expressed confidence in the long-term growth of BNPL, likening its potential longevity to that of credit cards. He emphasized that consumers increasingly prefer BNPL due to its perceived safety, utility as a budgeting tool, lower total cost of ownership, and reduced risk of personal bankruptcy compared to traditional credit cards. Regarding engagement, Mr. Youakim highlighted that shopping initiatives, including features like the Earn Tab, couponing, discounting, and price comparison, are part of a two-year strategy (2025-2026) aimed at driving value for mid-to-low income and younger consumers. These features encourage repeat app visits, which in turn boost retention and create opportunities to introduce subscription products.

Hal Goetsch of B. Riley Financial questioned the sequential volatility in Sezzle's effective take rate, asking if the high Q1 figure was an anomaly and how investors should think about the metric's seasonality going forward.

Answer

Executive Chairman & CEO Charlie Youakim confirmed that Q1's high take rate was an anomaly driven by seasonality. He explained that revenue from high-volume Q4 transactions is recognized in Q1, which has a lower GMV base, thus inflating the rate. He also highlighted that a shift to lower-cost ACH payments reduces the top-line take rate but improves gross margin, which exceeded 60% in Q2.

Hal Goetsch questioned the counterintuitive nature of Pagaya's credit pullback given positive macro trends, seeking more qualitative and quantitative color on partner behavior and Pagaya's response, and asked if lending partners were receptive to this pullback.

Answer

Sanjiv Das (President) acknowledged the positive macro trends but explained that lending partners expressed increased uncertainty by Q3/Q4, leading Pagaya to proactively reduce exposure in marginal risk tiers. Gal Krubiner (CEO) emphasized that proactive action before losses materialize is key to discipline. Evangelos Perros (CFO) confirmed that partners appreciate stability over aggressive growth, preferring a stronger Pagaya with measured growth.

Hal Goetsch of B. Riley Securities sought further qualitative and quantitative details on Pagaya's proactive credit tightening, noting it seemed counterintuitive given improving macro trends. He asked for more insight into partner behavior and Pagaya's response.

Answer

CFO Evangelos Perros acknowledged the counterintuitive nature but emphasized that actions were driven by increased uncertainty observed among lending partners, who became less certain about credit expansion. CEO Gal Krubiner stressed that proactive action before losses materialize is key, and partners appreciate Pagaya's focus on stability over aggressive short-term growth.

Hal Goetsch asked for more detail on the process of onboarding a new bank partner, particularly one with limited technical resources, to better understand the workflows and assets Pagaya provides after a term sheet is signed.

Answer

Co-Founder and President Sanjiv Das detailed a rigorous, multi-stage onboarding process that can take six to nine months. He explained that before tech integration, Pagaya engages in a deep analysis with the bank's risk and compliance teams to validate models and ensure regulatory compliance, including the 'true lender' test. This thorough process creates high barriers to entry and ensures a strong, embedded partnership once live.

Hal Goetsch requested more detail on the process of onboarding a new bank partner, particularly one with limited technical resources, asking about the specific workflows and assets Pagaya provides.

Answer

Co-Founder and President Sanjiv Das detailed a rigorous 6-to-9-month onboarding process that goes far beyond tech integration. It includes deep dives into model review, risk management, regulatory compliance, and legal 'true lender' qualifications before the final tech integration begins. He noted that these high entry barriers create a strong, lasting partnership once completed.

Hal Goetsch from B. Riley Securities asked about the drivers of revenue seasonality between Q2 and Q3, the trend in the number of kiosks under one year old, and the company's thoughts on developing a stablecoin or other crypto off-ramp product.

Answer

CEO Brandon Mintz attributed the Q2-to-Q3 revenue seasonality to trends correlated with tax return season. He explained that the number of young kiosks remains high due to new deployments, not just relocations. On product development, Mintz stated that while they evaluate opportunities, building an off-ramp product is not a current priority as existing third-party solutions serve customers well and it is not deemed the most profitable project to pursue.

Hal Goetsch sought clarification on the financial impacts for the quarter, specifically the dollar amount of tariffs and the costs from running dual production facilities in Indiana. He also asked if the tariff news was causing a pull-forward in customer orders and inquired about the pre-tariff value of a chip in a card.

Answer

CFO Jeff Hockstepp confirmed a ~$5 million tariff impact for the full year and ~$3 million in incremental costs for the Indiana facility transition in 2025. CEO John Lowe stated that no pull-forward of customer orders had been observed. For competitive reasons, Jeff Hockstepp declined to provide the specific cost of a chip but noted it is the most significant material cost component.

Hal Goetsch from B. Riley Securities sought clarification on the specific financial impacts from tariffs and the dual Indiana production facilities. He also asked if the tariff news was causing a pull-forward of customer orders and inquired about the approximate value of a chip as a component of a card's cost.

Answer

CFO Jeff Hockstepp confirmed the full-year impacts are expected to be approximately $5 million from tariffs and $3 million from incremental costs for the Indiana facility transition. CEO John Lowe stated that they have not observed any pull-forward in customer ordering patterns following the tariff announcement. Jeff Hockstepp declined to provide specific chip costs for competitive reasons but affirmed it is the most significant material cost component.

Hal Goetsch of B. Riley Securities sought to clarify the specific financial impacts from tariffs and the Indiana facility transition, asked about any customer order pull-forwards due to tariff news, and inquired about the pre-tariff cost of a chip per card.

Answer

CFO Jeff Hockstepp clarified the full-year cost impacts are expected to be ~$5M from tariffs and ~$3M from the Indiana facility transition. CEO John Lowe confirmed no customer order pull-forward has been observed. Management declined to provide specific chip costs for competitive reasons but noted it is the largest material cost.

Hal Goetsch from B. Riley Securities sought to clarify the specific financial impacts from tariffs and the Indiana facility transition, asked about any customer order pull-forward, and inquired about the pre-tariff cost of a chip per card.

Answer

CFO Jeff Hockstepp clarified the expected full-year cost impacts are approximately $5 million from tariffs and $3 million from the Indiana facility transition. CEO John Lowe stated there has been no pull-forward of customer orders. Hockstepp declined to provide specific chip costs for competitive reasons but confirmed it is the largest material cost.

Hal Goetsch from B. Riley Financial asked about the progress and strategy for monetizing the TriumphPay payments network, noting the strong growth and the need to improve pricing.

Answer

Aaron Graft, Founder, Vice Chairman & CEO, and Todd Ritterbusch, President of Payments & Banking, described a strategic shift from a startup, market-share-focused phase to a value-capture phase. Ritterbusch confirmed that conversations with clients to reprice contracts based on value delivered are underway and will accelerate, particularly with larger brokers in Q3.

Hal Goetsch of B. Riley Financial, Inc. inquired about the strategy and progress regarding the monetization and pricing of the TriumphPay payments network.

Answer

CEO Aaron Graft described the business's transition from a 'start-up mode' focused on market share to a 'value mode' focused on monetization. President of Payments & Banking Todd Ritterbusch added that after assessing the value created for clients, the company is confidently moving forward with repricing conversations, which will accelerate with larger brokers in Q3.

Inquired about the performance and growth trends in the personal loan market versus newer verticals like credit cards and mortgages. Also asked for commentary on the potential impact of Google's antitrust issues on MoneyLion's customer acquisition strategy.

Answer

The company has diversified its enterprise revenue away from personal loans, but that vertical is still growing due to expansion across the credit spectrum. Credit cards are a significant growth area, while mortgages are expected to contribute more in 2025. Regarding Google, MoneyLion positions its platform as a 'walled garden' and a credible, must-have alternative for financial services clients to acquire customers, suggesting antitrust issues for competitors could be a positive.

Hal Goetsch asked about the company's current loan-to-deposit ratio and its target for this metric. He also inquired about how the potential rescheduling of cannabis could alter the business model and competitive landscape.

Answer

Executive Sundie Seefried stated the current loan-to-deposit ratio is around 10%, with a long-term goal of reaching 80%. She views rescheduling as a significant positive that will boost deposits and lending opportunities. She believes Safe Harbor's compliance infrastructure will remain a key competitive advantage, even if more banks enter the cannabis market.