OppFi Reports Third Quarter 2023 Results, Raises Full-Year Earnings Outlook

Business Wire
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In this article:

Total revenue increased 7% year over year to $133.2 million for third quarter of 2023

Net income of $15.5 million for third quarter of 2023

Adjusted net income of $13.8 million for third quarter of 2023

Basic and Diluted EPS of $0.13 and $0.13, respectively, for third quarter of 2023

Adjusted EPS of $0.16 for third quarter of 2023

Net charge-off rate as a percentage of total revenue decreased 23% year over year to 42% for third quarter of 2023

Yield increased 7% year over year to 129% for third quarter of 2023

CHICAGO, November 09, 2023--(BUSINESS WIRE)--OppFi Inc. (NYSE: OPFI; OPFI WS) ("OppFi" or the "Company"), a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans, today reported financial results for the third quarter ended September 30, 2023.

"Throughout this year we have continued to make impactful adjustments to credit models with our bank partners that have resulted in improved credit performance and accelerated earnings growth," said Todd Schwartz, Chief Executive Officer and Executive Chairman of OppFi. "These results demonstrate our ability to balance growth and risk, while maintaining expense discipline. These core competencies combined with our strong balance sheet and excess funding capacity give us confidence in our ability to continue these positive trends next year, as we explore additional ways to create shareholder value."

"We are raising full-year adjusted net income and adjusted earnings per share guidance for the third time this year, based on third quarter results and greater confidence in current business trends," concluded Schwartz.

Financial Summary

The following tables present a summary of OppFi’s results for the three and nine months ended September 30, 2023 and 2022.

(in thousands, except per share data) Unaudited

Three Months Ended September 30,

Change

2023

2022

%

Total revenue

$

133,165

$

124,244

7.2

%

Net income (loss)

$

15,532

$

(661

)

2449.8

%

Adjusted net income(1)

$

13,776

$

768

1693.8

%

Adjusted EBITDA(1)

$

33,011

$

13,215

149.8

%

Basic EPS

$

0.13

$

(0.04

)

425.0

%

Diluted EPS

$

0.13

$

(0.04

)

425.0

%

Adjusted EPS(1)

$

0.16

$

0.01

1668.4

%

(in thousands, except per share data) Unaudited

Nine Months Ended September 30,

Change

2023

2022

%

Total revenue

$

376,025

$

332,829

13.0

%

Net income

$

37,538

$

8,539

339.6

%

Adjusted net income(1)

$

34,466

$

7,793

342.3

%

Adjusted EBITDA(1)

$

88,871

$

43,943

102.2

%

Basic EPS

$

0.29

$

0.29

—

%

Diluted EPS

$

0.29

$

0.09

222.2

%

Adjusted EPS(1)

$

0.41

$

0.09

339.4

%

(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.

Third Quarter Key Performance Metrics

The following tables represent key quarterly metrics. Beginning with the quarter ended June 30, 2023, for all periods presented, the Company 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,

September 30,
2023

June 30, 2023

September 30,
2022

Total Net Originations(a)

$

195,671

$

200,640

$

181,821

Ending Receivables(b)

$

415,933

$

397,754

$

402,571

% of Originations by Bank Partners

98

%

97

%

94

%

Net Charge-Offs as % of Total Revenue(c)

42

%

36

%

55

%

Net Charge-Offs as % of Average Receivables(c)

55

%

47

%

66

%

Auto-Approval Rate(d)

72

%

72

%

68

%

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

    • $40 million to $42 million, from previous range of $29 million to $35 million; and

  • Increase adjusted earnings per share

    • $0.47 to $0.49 based on approximate weighted average diluted share count of 85.5 million, from previous range of $0.34 to $0.41, 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) 300-8521

  • International: (412) 317-6026

An archived version of the webcast will be available on OppFi's website.

About OppFi

OppFi (NYSE: OPFI; OPFI WS) is a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans. Through transparency, responsible lending, financial inclusion, and an excellent customer experience, 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 4,000 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 September 30, 2023, a tax rate of 24.14% for the three months ended September 30, 2022, a tax rate of 24.17% for the nine months ended September 30, 2023, and a tax rate of 24.09% for the nine months ended September 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.

Third Quarter Results of Operations

Consolidated Statements of Operations

Comparison of the three months ended September 30, 2023 and 2022

The following table presents consolidated results of operations for the three months ended September 30, 2023 and 2022 (in thousands, except number of shares and per share data, unaudited).

Three Months Ended
September 30,

Change

2023

2022

$

%

Interest and loan related income

$

132,090

$

123,605

$

8,485

6.9

%

Other revenue

1,075

639

436

68.2

%

Total revenue

133,165

124,244

8,921

7.2

%

Change in fair value of finance receivables

(57,302

)

(70,601

)

13,299

(18.8

)%

Provision for credit losses on finance receivables

(195

)

(1,017

)

822

(80.8

)%

Net revenue

75,668

52,626

23,042

43.8

%

Expenses:

Sales and marketing

12,814

11,674

1,140

9.8

%

Customer operations

10,543

10,591

(48

)

(0.5

)%

Technology, products, and analytics

9,732

8,325

1,407

16.9

%

General, administrative, and other

14,921

13,910

1,011

7.3

%

Total expenses before interest expense

48,010

44,500

3,510

7.9

%

Interest expense

12,077

9,095

2,982

32.8

%

Total expenses

60,087

53,595

6,492

12.1

%

Income (loss) from operations

15,581

(969

)

16,550

1707.9

%

Change in fair value of warrant liability

334

1,323

(989

)

(74.8

)%

Other income

80

—

80

—

%

Income before income taxes

15,995

354

15,641

4418.4

%

Income tax expense

463

1,015

(552

)

(54.4

)%

Net income (loss)

15,532

(661

)

16,193

2449.8

%

Less: net income (loss) attributable to noncontrolling interest

13,363

(90

)

13,453

14947.8

%

Net income (loss) attributable to OppFi Inc.

$

2,169

$

(571

)

$

2,740

479.9

%

Earnings (loss) per share attributable to OppFi Inc.:

Earnings (loss) per common share:

Basic

$

0.13

$

(0.04

)

Diluted

$

0.13

$

(0.04

)

Weighted average common shares outstanding:

Basic

16,772,275

13,972,971

Diluted

17,057,778

13,972,971

Comparison of the nine months ended September 30, 2023 and 2022

The following table presents consolidated results of operations for the nine months ended September 30, 2023 and 2022 (in thousands, except number of shares and per share data, unaudited).

Nine Months Ended
September 30,

Change

2023

2022

$

%

Interest and loan related income

$

373,615

$

331,814

$

41,801

12.6

%

Other revenue

2,410

1,015

1,395

137.4

%

Total revenue

376,025

332,829

43,196

13.0

%

Change in fair value of finance receivables

(164,463

)

(162,280

)

(2,183

)

1.3

%

Provision for credit losses on finance receivables

(4,131

)

(2,043

)

(2,088

)

102.2

%

Net revenue

207,431

168,506

38,925

23.1

%

Expenses:

Sales and marketing

34,975

43,067

(8,092

)

(18.8

)%

Customer operations

31,249

31,933

(684

)

(2.1

)%

Technology, products, and analytics

29,465

24,848

4,617

18.6

%

General, administrative, and other

39,418

40,965

(1,547

)

(3.8

)%

Total expenses before interest expense

135,107

140,813

(5,706

)

(4.1

)%

Interest expense

34,679

24,421

10,258

42.0

%

Total expenses

169,786

165,234

4,552

2.8

%

Income from operations

37,645

3,272

34,373

1050.5

%

Change in fair value of warrant liability

838

7,024

(6,186

)

(88.1

)%

Other income

352

—

352

—

%

Income before income taxes

38,835

10,296

28,539

277.2

%

Provision for income taxes

1,297

1,757

(460

)

(26.2

)%

Net income

37,538

8,539

28,999

339.6

%

Less: net income attributable to noncontrolling interest

32,976

4,576

28,400

620.6

%

Net income attributable to OppFi Inc.

$

4,562

$

3,963

$

599

15.1

%

Earnings per share attributable to OppFi Inc.:

Earnings per common share:

Basic

$

0.29

$

0.29

Diluted

$

0.29

$

0.09

Weighted average common shares outstanding:

Basic

15,820,262

13,694,733

Diluted

16,046,831

84,277,277

Condensed Consolidated Balance Sheets

Comparison as of September 30, 2023 and December 31, 2022

Unaudited

(in thousands)

September 30, 2023

December 31, 2022

Assets

Cash and restricted cash

$

66,027

$

49,670

Finance receivables at fair value

466,465

457,296

Finance receivables at amortized cost, net

209

643

Other assets

67,891

72,230

Total assets

$

600,592

$

579,839

Liabilities and stockholders’ equity

Current liabilities

$

25,472

$

29,558

Other liabilities

39,892

42,183

Total debt

344,345

347,060

Warrant liabilities

1,050

1,888

Total liabilities

410,759

420,689

Total stockholders’ equity

189,833

159,150

Total liabilities and stockholders' equity

$

600,592

$

579,839

Total cash and restricted cash increased by $16.4 million as of September 30, 2023, compared to December 31, 2022, driven by an increase in received payments relative to originated loans. Finance receivables at fair value increased by $9.2 million as of September 30, 2023, compared to December 31, 2022, driven by recent strength in issuance volume and charge-offs. Finance receivables at amortized cost, net decreased by $0.4 million as of September 30, 2023 compared to December 31, 2022, due to the continued rundown of OppFi Card and SalaryTap finance receivables and increase in the allowance for credit losses. Other assets decreased by $4.3 million as of September 30, 2023 compared to December 31, 2022, mainly driven by a decrease in property, equipment, and software of $2.9 million.

Current liabilities decreased by $4.1 million as of September 30, 2023, compared to December 31, 2022, mainly driven by a decrease in accounts payable of $2.8 million and accrued expenses of $1.3 million. Other liabilities decreased by $2.3 million as of September 30, 2023, compared to December 31, 2022, due to a decrease in the operating lease liability of $1.1 million and the tax receivable agreement liability of $1.3 million. Total debt decreased by $2.7 million as of September 30, 2023, compared to December 31, 2022, primarily driven by a decrease in utilization of revolving lines of credit of $2.5 million. Total equity increased by $30.7 million as of September 30, 2023, compared to December 31, 2022, driven by net income and stock-based compensation.

Financial Capacity and Capital Resources

As of September 30, 2023, OppFi had $31.1 million in unrestricted cash, an increase of $14.9 million from December 31, 2022. As of September 30, 2023, OppFi had an additional $180.7 million of unused debt capacity under its financing facilities for future availability, representing a 34% overall undrawn capacity, an increase from $136.8 million as of December 31, 2022. The increase in undrawn debt was driven primarily by the increase in capacity of the revolving credit agreement with affiliates of Atalaya Capital Management in July 2023. Including total financing commitments of $525.0 million, and cash on the balance sheet of $66.0 million, OppFi had approximately $591.0 million in funding capacity as of September 30, 2023.

Reconciliation of Non-GAAP Financial Measures

Comparison of the three and nine months ended September 30, 2023 and 2022

(in thousands, except share and per share data)

Three Months Ended September 30,

Variance

(Unaudited)

2023

2022

%

Net income (loss)

$

15,532

$

(661

)

2449.8

%

Provision for income taxes

463

1,015

(54.4

)%

Debt issuance cost amortization

594

582

2.1

%

Other addbacks and one-time expenses, net(a)

1,658

76

2081.6

%

Sublease income

(80

)

—

—

%

Adjusted EBT

18,167

1,012

1695.2

%

Less: pro forma taxes(b)

(4,391

)

(244

)

1699.6

%

Adjusted net income

13,776

768

1693.8

%

Pro forma taxes(b)

4,391

244

1699.6

%

Depreciation and amortization

3,119

3,452

(9.6

)%

Interest expense

11,483

8,513

34.9

%

Business (non-income) taxes

242

238

1.7

%

Adjusted EBITDA

$

33,011

$

13,215

149.8

%

Adjusted EPS

$

0.16

$

0.01

Weighted average diluted shares outstanding

85,288,105

84,080,808

(a) For the three months ended September 30, 2023, other addbacks and one-time expenses, net of $1.7 million included a $(0.3) million addback due to the change in fair value of the warrant liabilities, $0.1 million in retention and severance expenses, $1.1 million in expenses related to stock compensation, a $0.2 million expense related to provision for credit losses on the OppFi Card finance receivables, and $0.6 million in professional fees related to corporate development. For the three months ended September 30, 2022, other addbacks and one-time expenses, net of $0.1 million included a $(1.3) million addback due to the change in fair value of the warrant liabilities, $0.6 million in recruiting, retention and severance expenses, and $0.8 million in expenses related to stock compensation.

(b) Assumes a tax rate of 24.17% for the three months ended September 30, 2023 and 24.14% for the three months ended September 30, 2022, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes.

(in thousands, except share and per share data)

Nine Months Ended September 30,

Variance

(Unaudited)

2023

2022

%

Net income

$

37,538

$

8,539

339.6

%

Provision for income taxes

1,297

1,757

(26.2

)%

Debt issuance cost amortization

1,872

1,626

15.1

%

Other addbacks and one-time expenses, net(a)

4,981

(1,656

)

400.8

%

Sublease income

(239

)

—

—

%

Adjusted EBT

45,449

10,266

342.7

%

Less: pro forma taxes(b)

(10,983

)

(2,473

)

344.1

%

Adjusted net income

34,466

7,793

342.3

%

Pro forma taxes(b)

10,983

2,473

344.1

%

Depreciation and amortization

9,827

10,056

(2.3

)%

Interest expense

32,807

22,795

43.9

%

Business (non-income) taxes

788

826

(4.6

)%

Adjusted EBITDA

$

88,871

$

43,943

102.2

%

Adjusted EPS

$

0.41

$

0.09

Weighted average diluted shares outstanding

84,826,413

84,277,277

(a) For the nine months ended September 30, 2023, other addbacks and one-time expenses, net of $5.0 million included a $(0.8) million addback due to the change in fair value of the warrant liabilities, a $(0.1) million addback due to partial forgiveness of the secured borrowing payable, a $(3.0) million addback from the reclassification of OppFi Card finance receivables from assets held for sale to assets held for investment at amortized cost, a $4.0 million expense related to provision for credit losses on the OppFi Card finance receivables, $0.9 million in retention and severance expenses, $3.1 million in expenses related to stock compensation, and $1.0 million in professional fees related to corporate development. For the nine months ended September 30, 2022, other addbacks and one-time expenses, net of $(1.7) million included a $(7.0) million addback due to the change in fair value of the warrant liabilities, $2.9 million in recruiting, retention, and severance expenses, $2.4 million in expenses related to stock compensation, and $0.1 million in one-time legal expenses.

(b) Assumes a tax rate of 24.17% for the nine months ended September 30, 2023 and a 24.09% tax rate for the nine months ended September 30, 2022, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes.

Adjusted Earnings Per Share

Three Months Ended September 30,

(Unaudited)

2023

2022

Weighted average Class A common stock outstanding

16,772,275

13,972,971

Weighted average Class V voting stock outstanding

93,730,327

95,397,996

Elimination of earnouts at period end

(25,500,000

)

(25,500,000

)

Dilutive impact of restricted stock units

235,514

192,127

Dilutive impact of performance stock units

49,989

17,714

Weighted average diluted shares outstanding

85,288,105

84,080,808

(in thousands, except share and per share data)

Three Months Ended
September 30, 2023

Three Months Ended
September 30, 2022

(Unaudited)

$

Per Share

$

Per Share

Weighted average diluted shares outstanding

85,288,105

84,080,808

Net income (loss)

$

15,532

$

0.18

$

(661

)

$

(0.01

)

Provision for income taxes

463

0.01

1,015

0.01

Debt amortization

594

0.01

582

0.01

Other addbacks and one-time expenses

1,658

0.02

76

—

Sublease income

(80

)

—

—

—

Adjusted EBT

18,167

0.21

1,012

0.01

Less: pro forma taxes

(4,391

)

(0.05

)

(244

)

—

Adjusted net income

13,776

0.16

768

0.01

Nine Months Ended September 30,

(Unaudited)

2023

2022

Weighted average Class A common stock outstanding

15,820,262

13,694,733

Weighted average Class V voting stock outstanding

94,279,582

95,946,836

Elimination of earnouts at period end

(25,500,000

)

(25,500,000

)

Dilutive impact of restricted stock units

198,698

123,722

Dilutive impact of performance stock units

27,871

11,986

Weighted average diluted shares outstanding

84,826,413

84,277,277

(in thousands, except share and per share data)

Nine Months Ended
September 30, 2023

Nine Months Ended
September 30, 2022

(Unaudited)

$

Per Share

$

Per Share

Weighted average diluted shares outstanding

84,826,413

84,277,277

Net income

$

37,538

$

0.44

$

8,539

$

0.10

Provision for income taxes

1,297

0.02

1,757

0.02

Debt amortization

1,872

0.02

1,626

0.02

Other addbacks and one-time expenses

4,981

0.06

(1,656

)

(0.02

)

Sublease income

(239

)

—

—

—

Adjusted EBT

45,449

0.54

10,266

0.12

Less: pro forma taxes

(10,983

)

(0.13

)

(2,473

)

(0.03

)

Adjusted net income

34,466

0.41

7,793

0.09

View source version on businesswire.com: https://www.businesswire.com/news/home/20231109921413/en/

Contacts

Investor Relations: investors@oppfi.com
Media Relations: media@oppfi.com

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