Sign in

You're signed outSign in or to get full access.

OF

Oportun Financial Corp (OPRT)·Q4 2024 Earnings Summary

Executive Summary

  • Returned to GAAP profitability: Q4 2024 net income $8.7M ($0.20 diluted EPS), with Adjusted EPS $0.49 and Adjusted EBITDA $41.0M; credit metrics improved and OpEx fell 31% YoY .
  • Revenue declined 4% YoY to $250.9M, primarily due to the November 12 sale of the credit card receivables portfolio and lower average daily principal; net revenue rose 30% YoY on lower net charge-offs and fair value marks despite a $17M non‑cash write‑off tied to refinancing .
  • FY25 guidance raised: Adjusted EPS to $1.10–$1.30 (from preliminary $1.00–$1.25), with FY25 revenue $945–$970M, NCO rate 11.5%±50 bps, and Adjusted EBITDA $135–$145M; Q1 2025 guidance: revenue $225–$230M and Adjusted EBITDA $18–$22M .
  • Capital markets strength: January ABS deal $425M, 7x oversubscribed, 6.95% average yield (127 bps lower vs Aug 2024); CFO transition announced (retirement effective Mar 28, 2025; interim CFO Casey Mueller) .

What Went Well and What Went Wrong

What Went Well

  • Cost discipline drove profitability: Total OpEx fell to $89.5M (−31% YoY), below the $97.5M target; Adjusted EBITDA rose to $41.0M (+315% YoY) on reduced OpEx and lower charge-offs .
    “We returned to GAAP profitability… adjusted ROE of 25%… continued expense discipline” — CEO Raul Vazquez .
  • Credit improved: Annualized net charge-off (NCO) rate fell to 11.7% (lowest since Q3’22); 30+ day delinquency improved to 4.8%; front‑book NCO 10.5% within 9–11% target .
  • Originations growth resumed: $522M (+19% YoY), with portfolio yield up 155 bps to 34.2%; secured personal loans expanded to $162M receivables (losses ~500 bps lower vs unsecured; ~75% higher revenue per loan) .

What Went Wrong

  • Revenue headwinds: Total revenue down 4% YoY to $250.9M, driven by credit card portfolio sale and lower average principal balance; excluding card sale, revenue down ~2% .
  • One‑time financing charge: $17M non‑cash write‑off of deferred financing fees tied to corporate debt refinancing, depressing net revenue and raising interest expense .
  • Leverage and cost of debt still elevated: Debt‑to‑equity 7.9x; cost of debt 8.0% (Q4), reflecting mix shift as low‑rate 2021 debt runs off; management expects potential near‑term uptick before longer‑term decline .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$250.0 $250.0 $250.9
Net Revenue ($USD Millions)$60.0 $63.0 $93.4
GAAP Diluted EPS ($USD)$(0.78) $(0.75) $0.20
Adjusted EPS ($USD)$0.08 $0.02 $0.49
Adjusted EBITDA ($USD Millions)$30.0 $31.0 $41.0
Annualized Net Charge-Off Rate (%)12.3% 11.9% 11.7%
30+ Day Delinquency Rate (%)4.96% 5.2% 4.8%
Total Operating Expenses ($USD Millions)$109.0 $102.0 $89.5
Portfolio Yield (%)33.9% 33.2% 34.2%
Originations ($USD Millions)$435.0 $480.0 $522.2

Notes and drivers:

  • Q4 YoY revenue decline was driven by credit card sale and lower average principal; net revenue rose sharply on lower charge-offs and fair value marks despite $17M non‑cash write‑off .
  • Q4 Adjusted EBITDA margin improved to 16.3% (from 3.8% in Q4’23), reflecting reduced OpEx and lower net charge‑offs .

KPIs

KPIQ2 2024Q3 2024Q4 2024
Aggregate Originations ($USD Millions)$435.0 $480.0 $522.2
Portfolio Yield (%)33.9% 33.2% 34.2%
30+ Day Delinquency Rate (%)4.96% 5.2% 4.8%
Annualized Net Charge-Off Rate (%)12.3% 11.9% 11.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)Q1 2025N/A$225–$230M Introduced
Annualized Net Charge-Off Rate (%)Q1 2025N/A12.3% ±15 bps Introduced
Adjusted EBITDA ($USD Millions)Q1 2025N/A$18–$22M Introduced
Total Revenue ($USD Millions)FY 2025N/A$945–$970M Introduced
Annualized Net Charge-Off Rate (%)FY 202511%–12% 11.5% ±50 bps Maintained/tightened midpoint
Adjusted EBITDA ($USD Millions)FY 2025N/A$135–$145M Introduced
Adjusted Net Income ($USD Millions)FY 2025N/A$53–$63M Introduced
Adjusted EPS ($USD)FY 2025$1.00–$1.25 $1.10–$1.30 Raised

Additional notes:

  • Management reiterated expectation to be GAAP profitable for full-year 2025 .
  • Credit card sale’s revenue contribution was $4M in Q4 and $34M in FY24; FY25 revenue guide excludes card business .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Credit performance & underwritingFront-book NCO 10.6%; 30+ delinquency down; average loan size reduced; V12 model implemented Front-book NCO 10.4%; 30+ delinquency 5.2%; vintages improving NCO 11.7% (lowest since Q3’22); front-book NCO 10.5%; back-book shrinking to 1% by YE25 Improving
Originations & channelsIntent to return to growth; seasonal ramp expected Originations $480M; growth to continue; multi-channel plans incl. physical expansion and partners Originations $522M (+19% YoY); confidence in retail/contact center; modest marketing spend to drive growth Positive
Cost discipline & OpEx ratioGAAP OpEx $109M (−20% YoY); adjusted OpEx ratio 13.8% (record low) GAAP OpEx $102M (−17% YoY); targeting ≤$97.5M by Q4 GAAP OpEx $89.5M (−31% YoY); ongoing target ~$97.5M/quarter in 2025; long-term adjusted OpEx ratio target 12.5% Structural improvement
Capital markets & fundingNew $245M warehouse; diversified financings raised since Jun 2023 ABS transaction 8.07% yield; Castlelake ABS 7.27% Jan ABS $425M, 7x oversubscribed, 6.95% average yield (127 bps lower vs Aug) Improving access, lower cost
Macro sensitivityWatching inflation; conservative posture Recession fears diminished; Fed cuts initiated Inflation ~3% discussed; guidance scenarios contemplate sensitivities; underwriting built on inflation-period data Managed
Product mix: Secured loansSecured loans LOS ~500 bps lower; revenue/loan >60% higher —Secured receivables $162M (+38% YoY); revenue/loan ~75% higher Mix shift to higher unit economics
Corporate actionsLOI to sell credit card portfolio Credit card sale closed; term loan refinancing with warrants CFO retirement and interim CFO transition; continued deleverage Transition, execution

Management Commentary

  • “Q4 marked our return to GAAP profitability… adjusted ROE of 25%… we expect to be profitable on a GAAP basis for full year 2025.” — CEO Raul Vazquez .
  • “Net revenue would have been $110M, up 53% YoY, excluding the one-time $17M non‑cash write‑off of deferred financing fees related to refinancing.” — CFO Jonathan Coblentz .
  • “Adjusted EBITDA performance exceeded the high end of our guidance by $11M, primarily on lower than anticipated operating expenses and net charge-offs.” — CFO Jonathan Coblentz .
  • “We’re increasing our full-year adjusted EPS expectations to $1.10 to $1.30… reflecting 53% to 81% year-over-year growth.” — CEO Raul Vazquez .

Q&A Highlights

  • Guidance details and share count: Analyst noted FY25 guide uplift; share count projection updated to 48.2M diluted; drivers include operating expense flat at $97.5M/quarter and improved credit (11.5% NCO midpoint) .
  • Growth channels: All channels active; retail and contact centers showing strength; marketing investment to drive demand without loosening credit box .
  • Cost of capital and leverage: New ABS pricing favorable (6.95%); near-term cost of funds may tick up as 2% legacy debt runs off; focus on deleveraging (debt-to-equity improving) .
  • Fair value marks and GAAP impact: Residual fair value marks on ABS notes (~$22.3M remaining) expected to diminish by early 2026; guidance includes bottom-line impact .
  • Competitive landscape: Pricing rational; Oportun focuses on thin/no‑file borrowers—distinct TAM vs traditional fintechs; V12 built using inflation period data supports underwriting in current environment .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable via the S&P Global data feed during this session; as a result, explicit beat/miss vs consensus cannot be provided at this time.
    Values retrieved from S&P Global were unavailable due to API limits.
  • BTIG noted that 2025 guidance appeared above consensus during the Q&A, indicating potential upward estimate revisions, but this is an analyst observation rather than a quantified consensus comparison .

Key Takeaways for Investors

  • The pivot to GAAP profitability with strong adjusted metrics and improved credit quality is a clear inflection; reduced OpEx provides operating leverage as originations grow .
  • Revenue headwinds from the credit card sale are transitory; net revenue and adjusted EBITDA benefited from lower charge-offs and fair value dynamics; expect sequential revenue growth to return by late 2025 per guidance .
  • FY25 guide raised (Adjusted EPS $1.10–$1.30) and ABS financing momentum (lower yields, oversubscription) de‑risk funding and support originations growth under a conservative credit box—constructive for multiple expansion .
  • Secured personal loans offer superior unit economics (losses ~500 bps lower; revenue/loan ~75% higher), signaling mix shift that can sustain risk‑adjusted margins even in a cautious macro .
  • Watch near‑term cost of funds as 2021 low‑rate debt runs off; management expects longer‑term improvement as ABS spreads tighten and refinancing benefits accrue .
  • Governance/transition: CFO retirement and interim CFO announced; continuity in finance leadership and ongoing deleverage commitments mitigate transition risk .
  • Tactical catalysts: Continued credit improvement, originations growth fueled by marketing and partner channels, and potential estimate revisions if execution tracks raised FY25 guide .

Additional Data and Context

  • Credit card portfolio sale closed Nov 12, 2024; expected Adjusted EBITDA accretion ~$2M in Q4’24 and ~$11M in FY25 .
  • FY25 guidance detail (Q1 2025 and FY 2025): revenue, NCO rate, Adjusted EBITDA, and Adjusted EPS ranges provided; management reaffirmed path to GAAP full‑year profitability .
  • January 2025 ABS: $425M issuance, 6.95% average yield (127 bps lower vs Aug’24), >7x oversubscribed—strong investor demand supports lower financing costs and capacity for growth .