Oportun Financial Corp. ((OPRT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Oportun Financial Corp. recently held its earnings call, revealing a generally positive sentiment with notable achievements in maintaining GAAP profitability and improving credit metrics. The company successfully reduced costs and completed a significant asset-backed securities transaction. However, challenges such as slightly lower-than-expected revenue and a higher net charge-off rate were also discussed. Despite these hurdles, the increased EPS guidance provided a positive outlook.
GAAP Profitability Achieved
Oportun Financial Corp. reported a net income of $6.9 million, marking the third consecutive quarter of GAAP profitability. This achievement was driven by a substantial $38 million year-over-year improvement, underscoring the company’s strong financial performance.
Improved Credit Performance
The company highlighted improvements in its credit metrics, with the annualized net charge-off rate improving by 41 basis points to 11.9%. Additionally, the 30-plus day delinquency rate improved by 54 basis points to 4.4% year-over-year, reflecting better credit performance.
Cost-Reduction Success
Oportun successfully reduced its operating expenses by 13% year-over-year to $94 million. The company now anticipates full-year 2025 operating expenses to be $380 million, down from the previous expectation of $390 million, showcasing effective cost management.
Successful ABS Transaction
The company completed a $439 million asset-backed securities transaction with a weighted average yield of 5.67%. This represents a 128 basis point improvement from the prior transaction in January, and the most senior bonds received a AAA rating, highlighting the transaction’s success.
Increased Adjusted EPS Guidance
Oportun raised its full-year adjusted EPS guidance by 8% at the midpoint, now targeting $1.20 to $1.40 per share. This represents a growth of 67% to 94% compared to last year’s adjusted EPS levels, indicating strong future earnings potential.
Lower Than Expected Revenue
The company reported total revenue of $234 million, which was modestly below guidance due to higher member repayment rates. This led to a lower loan yield, impacting the revenue figures.
Higher Charge-off Rate Expected
Oportun now expects the full-year annualized net charge-off rate to be 11.9%, which is 40 basis points above previous guidance. This increase is attributed to a higher percentage of new member originations.
Portfolio Yield Decline
The portfolio yield for the second quarter was 32.8%, a decrease of 106 basis points compared to the prior year quarter. This decline was primarily due to a higher rate of loan repayment, affecting the overall yield.
Forward-Looking Guidance
Oportun Financial Corp. provided forward-looking guidance indicating continued GAAP profitability and projected adjusted EPS growth for the full year 2025. The company expects to maintain strong financial performance with improved credit metrics and reduced operating expenses. The successful ABS transaction and increased EPS guidance further support a positive outlook for the future.
In summary, Oportun Financial Corp.’s earnings call conveyed a generally positive sentiment with significant achievements in profitability and credit performance. Despite some challenges with revenue and charge-off rates, the company’s increased EPS guidance and successful financial transactions highlight a promising future. Investors and stakeholders can look forward to continued growth and financial stability from Oportun.