OppFi Inc. (NYSE: OPFI; OPFI WS) (“OppFi” or the “Company”), a mission-driven fintech platform that helps everyday Americans gain access to credit with digital specialty finance products, today reported financial results for the second quarter ended June 30, 2023.
“During the quarter, we further demonstrated our focus on profitability by balancing growth and risk as well as maintaining expense discipline,” said Todd Schwartz, Chief Executive Officer and Executive Chairman of OppFi. “In the second quarter of 2023, we more than doubled adjusted net income, while achieving double-digit revenue growth, on a year-over-year basis.”
“These results were driven by improvement in credit performance, due to adjustments made last year and recent modeling enhancements, as well as continued total expense leverage and growth in recoveries,” concluded Schwartz. “We are raising our guidance for full-year adjusted net income and adjusted earnings per share, based on second quarter results and current business trends.”
Financial Summary
The following tables present a summary of OppFi’s results for the three and six months ended June 30, 2023 and 2022.
(in thousands, except per share data) Unaudited | Three Months Ended June 30, | Change | |||||||||
2023 | 2022 | % | |||||||||
Total revenue | $ | 122,486 | $ | 107,875 | 13.5 | % | |||||
Net income | $ | 18,076 | $ | 9,497 | 90.3 | % | |||||
Adjusted net income(1) | $ | 16,255 | $ | 6,819 | 138.4 | % | |||||
Adjusted EBITDA(1) | $ | 35,744 | $ | 20,007 | 78.7 | % | |||||
Basic EPS | $ | 0.14 | $ | 0.26 | (46.4 | )% | |||||
Diluted EPS | $ | 0.14 | $ | 0.10 | 36.5 | % | |||||
Adjusted EPS(1) | $ | 0.19 | $ | 0.08 | 137.1 | % | |||||
(in thousands, except per share data) Unaudited | Six Months Ended June 30, | Change | |||||||||
2023 | 2022 | % | |||||||||
Total revenue | $ | 242,860 | $ | 208,585 | 16.4 | % | |||||
Net income | $ | 22,006 | $ | 9,200 | 139.2 | % | |||||
Adjusted net income(1) | $ | 20,691 | $ | 7,377 | 180.5 | % | |||||
Adjusted EBITDA(1) | $ | 55,861 | $ | 31,192 | 79.1 | % | |||||
Basic EPS | $ | 0.16 | $ | 0.33 | (53.4 | )% | |||||
Diluted EPS | $ | 0.16 | $ | 0.10 | 55.8 | % | |||||
Adjusted EPS(1) | $ | 0.24 | $ | 0.09 | 179.8 | % | |||||
(1) Non-GAAP Financial Measures: Adjusted net income, Adjusted EBITDA and Adjusted EPS are financial measures that have not been prepared in accordance with GAAP. See “Reconciliation of Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures.
Second Quarter Key Performance Metrics
The following tables represent key quarterly metrics. Beginning with this quarter, for all periods presented, the Company has updated its key performance metrics to reflect the Company’s decision to wind down its SalaryTap and OppFi Card businesses. The key performance metrics presented are for the OppLoans product only and exclude the SalaryTap and OppFi Card products. Prior period metrics currently presented may differ slightly than previously reported due to the exclusion of SalaryTap and OppFi Card.
(in thousands) Unaudited | As of and for the Three Months Ended, | |||||||||||
June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||
Total Net Originations(a) | $ | 200,640 | $ | 159,596 | $ | 224,919 | ||||||
Ending Receivables(b) | $ | 397,754 | $ | 369,715 | $ | 395,816 | ||||||
% of Originations by Bank Partners | 97 | % | 95 | % | 95 | % | ||||||
Net Charge-Offs as % of Total Revenue(c) | 36 | % | 49 | % | 43 | % | ||||||
Net Charge-Offs as % of Average Receivables(c) | 47 | % | 62 | % | 52 | % | ||||||
Auto-Approval Rate(d) | 72 | % | 70 | % | 63 | % | ||||||
a. | Total net originations include both originations by bank partners on the OppFi platform, as well as direct originations by OppFi. |
b. | Receivables are defined as the unpaid principal balances of loans at the end of the reporting period. |
c. | Annualized net charge-offs as a percentage of total revenue and annualized net charge-offs as a percentage of average receivables (defined as the unpaid principal of loans) represents total charge offs from the period less recoveries as a percent of total revenue and average receivables, respectively. Finance receivables are charged off at the earlier of the time when accounts reach 90 days past due on a recency basis, when OppFi receives notification of a customer bankruptcy or is otherwise deemed uncollectible. |
d. | Auto-Approval Rate is calculated by taking the number of approved loans that are not decisioned by a loan advocate or underwriter (auto-approval) divided by the total number of loans approved. |
Full Year 2023 Guidance Update
-
Affirm total revenue
- $500 million to $520 million, resulting in approximately 10% to 15% growth year over year;
-
Raise adjusted net income
- $29 million to $35 million, from previous range of $24 million to $30 million; and
-
Increase adjusted earnings per share
- $0.34 to $0.41 based on approximate weighted average diluted share count of 85.0 million, from previous range of $0.28 to $0.35, based on approximate weighted average diluted share count of 85.0 million.
Conference Call
Management will host a conference call today at 4:30 p.m. ET to discuss OppFi’s financial results and business outlook. The webcast of the conference call will be made available on the Investor Relations page of the Company's website.
The conference call can also be accessed with the following dial-in information:
- Domestic: (877) 407-0789
- International: (201) 689-8562
An archived version of the webcast will be available on OppFi's website.
About OppFi
OppFi (NYSE: OPFI; OPFI WS) is a mission-driven fintech platform that helps everyday Americans gain access to credit with digital specialty finance products. Through its unwavering commitment to customer service, the Company supports consumers, who are turned away by mainstream options, to build better financial health. OppLoans by OppFi maintains a 4.5/5.0 star rating on Trustpilot with more than 3,900 reviews, making the Company one of the top consumer-rated financial platforms online. For more information, please visit oppfi.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of 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. OppFi’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “possible,” “continue,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, without limitation, OppFi’s expectations with respect to its full year 2023 guidance, the future performance of OppFi’s platform, and expectations for OppFi’s growth and future financial performance. These forward-looking statements are based on OppFi’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside OppFi’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the impact of general economic conditions, including economic slowdowns, inflation, interest rate changes, recessions, and tightening of credit markets on OppFi’s business; the impact of challenging macroeconomic and marketplace conditions, including lingering effects of COVID-19 on OppFi’s business; the impact of stimulus or other government programs; whether OppFi will be successful in obtaining declaratory relief against the Commissioner of the Department of Financial Protection and Innovation for the State of California; whether OppFi will be subject to AB 539; whether OppFi’s bank partners will continue to lend in California and whether OppFi’s financing sources will continue to finance the purchase of participation rights in loans originated by OppFi’s bank partners in California; the impact that events involving financial institutions or the financial services industry generally, such as actual concerns or events involving liquidity, defaults, or non-performance, may have on OppFi’s business; risks related to the material weakness in OppFi’s internal controls over financial reporting; the risk that the business combination disrupts current plans and operations; the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of OppFi to grow and manage growth profitably and retain its key employees; risks related to new products; concentration risk; costs related to the business combination; changes in applicable laws or regulations; the possibility that OppFi may be adversely affected by other economic, business, and/or competitive factors; risks related to management transitions; risks related to the restatement of OppFi’s financial statements and any accounting deficiencies or weaknesses related thereto; and other risks and uncertainties indicated from time to time in OppFi’s filings with the United States Securities and Exchange Commission, in particular, contained in the section or sections captioned “Risk Factors.” OppFi cautions that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements, which speak only as of the date made. OppFi does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures that are unaudited and do not conform to GAAP, such as Adjusted EBT, Adjusted Net Income, Adjusted EBITDA and Adjusted EPS. Adjusted EBT is defined as Net Income, plus (1) provision for income taxes; (2) amortization of debt issuance costs; (3) other addbacks and one-time expenses; and (4) sublease income. Adjusted Net Income is defined as Adjusted EBT as defined above, adjusted for taxes assuming a tax rate of 24.17% for the three months ended June 30, 2023 and a tax rate of 24.14% for the three months ended June 30, 2022, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes, in order to allow for a comparison with other publicly traded companies. Adjusted EBITDA is defined as Adjusted Net Income as defined above, excluding (1) pro forma and business (non-income) taxes; (2) depreciation and amortization; and (3) interest expense. Adjusted EPS is defined as Adjusted Net Income as defined above, divided by weighted average diluted shares outstanding, which represent shares of both classes of common stock outstanding, excluding 25,500,000 shares related to earnout obligations and including the impact of unvested restricted stock units, unvested performance stock units, and the employee stock purchase plan. These non-GAAP financial measures have not been prepared in accordance with accounting principles generally accepted in the United States and may be different from non-GAAP financial measures used by other companies. OppFi believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These non-GAAP measures with comparable names should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. See “Reconciliation of Non-GAAP Financial Measures” below for reconciliations for OppFi's non-GAAP financial measures to the most directly comparable GAAP financial measures. A reconciliation of projected full year 2023 Adjusted Net Income and projected full year 2023 Adjusted EPS to the most directly comparable GAAP financial measures is not included in this press release because, without unreasonable efforts, the Company is unable to predict with reasonable certainty the amount or timing of non-GAAP adjustments that are used to calculate these measures.
Second Quarter Results of Operations
Consolidated Statements of Operations
Comparison of the three months ended June 30, 2023 and 2022
The following table presents consolidated results of operations for the three months ended June 30, 2023 and 2022 (in thousands, except number of shares and per share data, unaudited).
Three Months Ended June 30, | Change | ||||||||||||||
2023 | 2022 | $ | % | ||||||||||||
Interest and loan related income | $ | 121,583 | $ | 107,873 | $ | 13,710 | 12.7 | % | |||||||
Other revenue | 903 | 2 | 901 | 45050.0 | % | ||||||||||
Total revenue | 122,486 | 107,875 | 14,611 | 13.5 | % | ||||||||||
Change in fair value of finance receivables | (44,043 | ) | (42,154 | ) | (1,889 | ) | 4.5 | % | |||||||
Provision for credit losses on finance receivables | (3,866 | ) | (569 | ) | (3,297 | ) | 579.4 | % | |||||||
Net revenue | 74,577 | 65,152 | 9,425 | 14.5 | % | ||||||||||
Expenses: | |||||||||||||||
Sales and marketing | 12,314 | 17,804 | (5,490 | ) | (30.8 | )% | |||||||||
Customer operations | 10,445 | 10,850 | (405 | ) | (3.7 | )% | |||||||||
Technology, products, and analytics | 9,779 | 8,294 | 1,485 | 17.9 | % | ||||||||||
General, administrative, and other | 12,474 | 13,924 | (1,450 | ) | (10.4 | )% | |||||||||
Total expenses before interest expense | 45,012 | 50,872 | (5,860 | ) | (11.5 | )% | |||||||||
Interest expense | 11,231 | 7,878 | 3,353 | 42.6 | % | ||||||||||
Total expenses | 56,243 | 58,750 | (2,507 | ) | (4.3 | ||||||||||
