Oportun Financial Corp. Reports Strong Profitability Amid Revenue Challenges

Oportun Financial Corp. ((OPRT)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Oportun Financial Corp. highlighted a strong performance in profitability, credit performance, and disciplined expense management, despite challenges such as a decline in total revenue and a cautious stance on origination growth due to macroeconomic uncertainties.

GAAP Profitability Achieved

Oportun Financial Corp. reported GAAP profitability for the second consecutive quarter, with a net income of $9.8 million. This marks a significant $36 million improvement year-over-year, resulting in a return on equity (ROE) of 11%. This achievement underscores the company’s ability to maintain profitability in a challenging economic environment.

Strong Credit Performance

The company demonstrated strong credit performance with an annualized net charge-off rate of 12.2%, which is at the low end of their guidance. Additionally, dollar net charge-offs have decreased year-over-year for the sixth consecutive quarter, and the 30-plus day delinquency rate improved to 4.7%, marking a decline of 56 basis points year-over-year.

Robust Origination Growth

Oportun’s originations reached $469 million during the first quarter, reflecting a 39% increase year-over-year. This growth was largely driven by secured personal loans, which accounted for 19% of the personal loan growth, showcasing the company’s strategic focus on expanding its loan portfolio.

Expense Discipline and Reduction

The company successfully reduced operating expenses by 15% year-over-year to $93 million. However, marketing expenditures were increased by 24% to support origination growth, indicating a balanced approach to cost management and growth investment.

Improved Adjusted EBITDA

Oportun reported an adjusted EBITDA of $34 million, a substantial increase of $32 million year-over-year. This improvement was driven by effective cost reductions and enhanced credit performance, highlighting the company’s operational efficiency.

Decline in Total Revenue

Despite the positive developments, total revenue declined by $15 million or 6% year-over-year to $236 million. This decline was primarily due to the absence of $11 million in credit card revenue from the prior year, indicating challenges in maintaining revenue streams.

Reduced Origination Growth Outlook

Due to macroeconomic uncertainties, Oportun has moderated its full-year 2025 origination growth outlook to approximately 10%, down from the previous range of 10% to 15%. This cautious approach reflects the company’s prudence in navigating uncertain economic conditions.

Forward-Looking Guidance

During the earnings call, Oportun provided forward-looking guidance, projecting a GAAP net income of $9.8 million and an adjusted net income of $19 million, marking significant year-over-year improvements. The company expects total revenue for the full year 2025 to be between $945 million and $970 million, with an adjusted EPS forecast of $1.10 to $1.30, representing growth of 53% to 81% compared to 2024.

In summary, Oportun Financial Corp.’s earnings call conveyed a positive sentiment, driven by strong profitability, credit performance, and disciplined expense management. Despite a decline in total revenue and a cautious outlook on origination growth, the company remains focused on strategic growth and operational efficiency, positioning itself well for future challenges and opportunities.