oprt-20211103
000153871600015387162020-09-142020-09-1400015387162021-11-032021-11-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

November 3, 2021
Date of Report (date of earliest event reported)

OPORTUN FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Commission File Number 001-39050
Delaware45-3361983
State or Other Jurisdiction of
Incorporation or Organization
I.R.S. Employer Identification No.
2 Circle Star Way
San Carlos,CA94070
Address of Principal Executive OfficesZip Code
(650) 810-8823
Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareOPRT
Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.









Item 2.02. Results of Operations and Financial Condition

On November 3, 2021, Oportun Financial Corporation (the “Company”) issued a press release regarding the Company’s financial results for its fiscal quarter ended September 30, 2021. A copy of the Company’s press release is furnished as Exhibit 99.1 to this report.

The information in this report, including Exhibit 99.1 attached hereto, shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing, except as expressly stated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits
Exhibit Number
99.1
104Cover Page Interactive Data File embedded within the Inline XBRL document




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
OPORTUN FINANCIAL CORPORATION
(Registrant)
Date:November 3, 2021By:/s/ Jonathan Coblentz
Jonathan Coblentz
Chief Financial Officer and Chief Administrative Officer
(Principal Financial and Accounting Officer)


Document

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Oportun Reports Third Quarter 2021 Financial Results
Aggregate originations growth of 119% year-over-year

Diluted and Adjusted EPS of $0.75 and $0.78, respectively
SAN CARLOS, CA – November 3, 2021 – Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun” and the "Company") today reported financial results for the third quarter ended September 30, 2021.

“We delivered another excellent quarter, as we accelerated our growth in aggregate originations, revenue and earnings, maintained our strong credit profile and outperformed our forecast across the board," said Raul Vazquez, CEO of Oportun. "Our A.I.-driven digital platform now extends to 45 states, and we are delivering robust production through all our channels and partners. We are making excellent progress with our strategic initiatives, and are well positioned to continue making a significant and positive impact on the financial lives of our customers for years to come."
Third Quarter 2021 Results
MetricGAAP
Adjusted1
3Q213Q203Q213Q20
Total revenue$159.1$136.8$159.1$136.8
Net income (loss)$23.0$(6.0)$23.8$4.2
Diluted earnings (loss) per share$0.75$(0.22)$0.78$0.15
Adjusted EBITDA$18.1$(1.2)
Dollars in millions, except per share amounts.

Business Highlights
Aggregate Originations were $662 million, up 119% year-over-year
Managed Principal Balance at End of Period was $2.15 billion, up 17% year-over-year
Active Customers were 772,361, up 24% year-over-year
30+ Day Delinquency Rate of 2.8% as compared to 3.5% for the prior-year period
Annualized Net Charge-Off Rate of 5.5% as compared to 10.4% for the prior-year period

Financial and Operating Results
Previously, in order to facilitate useful measures for period-to-period comparisons of its business, the Company provided unaudited financial information on a GAAP basis as well as a Fair Value Pro Forma ("FVPF") adjusted basis to reflect the Company's performance as if the fair value option had been elected since inception for all loans originated and held for investment and all asset-backed notes issued. As of January 1, 2021, the FVPF adjustments are no longer necessary because all loans originated and held for investment and all asset-backed notes issued are recorded at fair value. All figures are as of September 30, 2021, unless otherwise noted.
1 See the section entitled “About Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of non-GAAP to GAAP measures. GAAP and Adjusted total revenue are the same for 2021 and 2020.
1


Financial Results

Revenue – Total revenue for the third quarter was $159.1 million, an increase of 16% as compared to $136.8 million in the prior-year quarter. The increase was primarily driven by higher interest income attributable to the Company's higher Average Daily Principal Balance due to growth in the underlying portfolio as a result of increased origination volume. Net revenue for the third quarter was $139.5 million, an increase of 51.1% as compared to FVPF Net Revenue of $92.4 million in the prior-year quarter. Net revenue improved from the prior-year quarter due to higher revenue, lower interest expense and lower charge-offs.

Operating Expenses For the third quarter, total operating expense was $111.4 million, as compared to $101.6 million in the prior-year quarter. Operating expense in the Company's unsecured personal loan business, excluding certain non-recurring charges and investment in new products, increased 10% year-over-year to $96.7 million, primarily driven by its increased investment in marketing to drive growth and initiatives to further enhance our technology. Operating expenses associated with new products grew year-over-year by $10.4 million to $14.6 million.

Net Income (Loss) and Adjusted Net Income (Loss) – Net income was $23.0 million, as compared to a net loss of $6.0 million in the prior-year quarter. Adjusted Net Income was $23.8 million as compared to $4.2 million in the prior-year quarter. The increases in net income and Adjusted Net Income are attributable to increased revenues and improved current period charge-offs, among the lowest in the company's history, which increased the value of the Company's loan portfolio.

Earnings (Loss) Per Share and Adjusted EPS – GAAP earnings per share, basic and diluted, were $0.82 and $0.75, respectively, for the three months ended September 30, 2021. GAAP earnings (loss) per share, basic and diluted, were both $(0.22) in the prior-year quarter. Adjusted Earnings Per Share was $0.78 as compared to $0.15 in the prior-year quarter.

Adjusted EBITDA – Adjusted EBITDA was $18.1 million, up from $(1.2) million in the prior-year quarter. The Company believes that Adjusted EBITDA is a useful metric because it is a proxy for Oportun's pre-tax cash profitability. In addition to adding back taxes, depreciation and amortization, stock-based compensation and certain non-recurring charges, Adjusted EBITDA also excludes the non-cash impact of fair value accounting.

Growth Trends
Originations – Aggregate Originations for the third quarter were $662.1 million, as compared to $302.4 million in the prior-year quarter. This 119.0% increase was primarily driven by growth in loan application volume due to higher demand.

Active Customers – Active customers for the third quarter were 772,361, a 24% increase as compared to 624,205 in the prior-year quarter. This increase was primarily driven by growth from digital marketing, direct mail and customer referral programs, and we have seen active customers continue to grow to 813,536 as of October 31, 2021.

Credit and Operating Metrics

Net Charge-Off Rate – The Annualized Net Charge-Off Rate for the quarter was 5.5%, compared to 10.4% for the prior-year quarter. The improved current period charge-offs are at historically low levels.

30+ Day Delinquency Rate – The Company's 30+ Day Delinquency Rate was 2.8% at the end of the quarter, compared to 3.5% at the end of the prior-year quarter. The improvement was due to the effectiveness of the Company's A.I.-driven underwriting, as well as overall economic recovery.

Operating Efficiency and Adjusted Operating Efficiency – Operating Efficiency for the quarter was 70.0% as compared to 74.3% in the prior-year quarter. Adjusted Operating Efficiency for the third quarter was 67.1%, as compared to 63.3% in the prior-year quarter. Operating Efficiency and Adjusted Operating Efficiency reflected the Company's investments in new products. Adjusted Operating Efficiency excludes stock-based compensation expense and the Company's retail network optimization expenses.

Return On Equity ("ROE") and Adjusted ROE – ROE for the quarter was 18.3%, as compared to (5.3)% in the prior-year quarter.  Adjusted ROE for the quarter was 19.0%, as compared to 3.7% in the prior-year quarter.

2


New Products

Secured personal loans – As of September 30, 2021, the Company had a secured personal loan receivables balance of $29.6 million, up from $0.3 million at the end of the third quarter 2020, and up 113% quarter-over-quarter.

Credit card receivables – As of September 30, 2021, the Company was servicing $38.2 million in credit card receivables, an increase of 1,094% over the prior-year quarter and nearly double the amount of receivables, sequentially. As of October 31, 2021, we had 94,705 active customer accounts in 45 states across the U.S.

Funding and Liquidity

As of September 30, 2021, total cash was $223.8 million, consisting of cash and cash equivalents of $168.4 million and restricted cash of $55.3 million. Cost of Debt and Debt-to-Equity were 2.8% and 3.3x, respectively, for and at the end of the third quarter 2021 as compared to FVPF Cost of Debt and FVPF Debt-to-Equity of 3.9% and 2.9x, respectively, for and at the end of the prior-year quarter. As of September 30, 2021, the Company had $71.0 million of undrawn capacity on its existing $600.0 million warehouse line; as of October 31, 2021, undrawn capacity was $534.0 million, the increase attributable to the issuance of the Company's 2021-C asset-backed notes. The Company's warehouse line is committed through September 2024.

On September 8, 2021, the Company closed on a Personal Loan Warehouse facility ("PLW") that provides $600.0 million of committed funding through September 2024. The Personal Loan Warehouse provides funding for both the Company's unsecured personal loans and secured personal loans. On the closing date, the Company drew on the warehouse facility to redeem $175.0 million of the Company's outstanding Series 2018-D Notes.

On October 28, 2021, the Company announced the issuance of $500.0 million of 3-year fixed-rate asset-backed notes by Oportun Issuance Trust 2021-C secured by a pool of its unsecured and secured personal installment loans. The transaction was priced with a weighted average fixed interest rate of 2.48% per annum.




Financial Outlook for Fourth Quarter and Full Year 2021
Oportun is providing the following guidance for 4Q 2021 and full year 2021 as follows:
4Q 2021
Full Year 2021
Aggregate Originations$800 M$2.23 B
Total Revenue$183 - $185 M$616 - $618 M
Adjusted EBITDA$8 - $10 M$31 - $33 M
Adjusted Net Income$20 - $22 M$73 - $75 M
Adjusted EPS (1)
$0.66 - $0.73$2.42 - $2.49
Annualized Net Charge-Off Rate7.3% +/- 10 bps7.1% +/- 10 bps


1 Based on 30,299,798 shares outstanding for 4Q 2021 and 30,025,315 shares outstanding for Full Year 2021.
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Conference Call
As previously announced, Oportun’s management will host a conference call to discuss third quarter 2021 results at 5:00 p.m. ET (2:00 p.m. PT) today. The dial-in number for the conference call is 877-407-9208 (toll-free) or 201-493-6784 (international). Participants should call in 10 minutes prior to the scheduled start time. A live webcast of the call will be accessible from the Investor Relations page of Oportun's website at https://investor.oportun.com. Both the call and webcast are open to the general public. For those unable to listen to the live broadcast, a webcast replay of the call will be available at https://investor.oportun.com for one year. An investor presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their most directly comparable GAAP measures, will be available on the Investor Relations page of Oportun's website at https://investor.oportun.com prior to the start of the conference call.

About Non-GAAP Financial Measures
This press release presents information about the Company’s Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA, Adjusted Operating Efficiency, and Adjusted Return on Equity, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes these non-GAAP measures can be useful measures for period-to-period comparisons of its core business and provide useful information to investors and others in understanding and evaluating its operating results. Non-GAAP financial measures are provided in addition to, and not as a substitute for, and are not superior to, financial measures calculated in accordance with GAAP. In addition, the non-GAAP measures the Company uses, as presented, may not be comparable to similar measures used by other companies. Reconciliations of non-GAAP to GAAP measures can be found below.

About Oportun
Oportun (Nasdaq: OPRT) is a financial services company that leverages its digital platform to provide responsible consumer credit to hardworking people. Using A.I.-driven models that are built on 15 years of proprietary customer insights and billions of unique data points, Oportun has extended more than $11.1 billion in affordable credit, providing its customers with alternatives to payday and auto title loans. In recognition of its responsibly designed products which help consumers build their credit history, Oportun has been certified as a Community Development Financial Institution (CDFI) since 2009. For more information visit oportun.com.

Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements as to future results of operations and financial position, achievement of our strategic priorities, and our fourth quarter and 2021 full year outlook. These statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause Oportun’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You generally can identify these statements by terms such as “expect,” “plan,” “anticipate,” “project,” "outlook,” “continue,” “may,” “believe,” or “estimate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These forward-looking statements are subject to the safe harbor provisions under 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. Oportun has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. These risks and uncertainties include those risks described in Oportun's filings with the Securities and Exchange Commission, including Oportun's most recent annual report on Form 10-K and most recent quarterly report on Form 10-Q, and include, but are not limited to, the impact of COVID-19 on our business and the economy as a whole; Oportun’s future financial performance, including aggregate originations; trends in revenue, net revenue, operating expenses, and net income; changes in market interest rates; increases in loan delinquencies and charge-offs; Oportun's ability to increase the volume of loans it makes; Oportun’s ability to successfully offer loans in additional states; and Oportun’s ability to compete successfully with other companies that are currently in, or may in the future enter, its industry. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, Oportun disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.

4


Contacts
Investor Contact
Nils Erdmann
650-810-9074
ir@oportun.com

Media Contact
Usher Lieberman
650-769-9414
usher.lieberman@oportun.com

Oportun and the Oportun logo are registered trademarks of Oportun, Inc.
5


Oportun Financial Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share data, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenue
Interest income$145.4 $128.7 $401.2 $415.5 
Non-interest income13.6 8.0 31.4 27.4 
Total revenue159.1 136.8 432.7 442.9 
Less:
Interest expense10.6 13.4 36.2 44.9 
Net decrease in fair value(9.0)(29.6)(26.5)(177.6)
Net revenue139.5 93.7 370.0 220.4 
Operating expenses:
Technology and facilities34.2 31.6 100.3 93.9 
Sales and marketing32.1 20.6 79.7 65.5 
Personnel29.0 26.7 84.4 79.9 
Outsourcing and professional fees13.3 11.5 40.8 36.2 
General, administrative and other2.7 11.1 22.9 17.6 
Total operating expenses111.4 101.6 328.1 293.2 
Income (loss) before taxes28.1 (7.8)41.9 (72.8)
Income tax expense (benefit)5.1 (1.8)8.7 (19.2)
Net income (loss)$23.0 $(6.0)$33.2 $(53.6)
Diluted Earnings (Loss) per Common Share $0.75 $(0.22)$1.11 $(1.97)
Diluted Weighted Average Common Shares 30,503,773 27,459,192 30,059,675 27,237,246 

Note: Numbers may not foot or cross-foot due to rounding.

6


Oportun Financial Corporation
CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)

September 30,December 31,
20212020
Assets
Cash and cash equivalents$168.4 $136.2 
Restricted cash55.3 32.4 
Loans receivable at fair value1,971.4 1,696.5 
Interest and fees receivable, net16.3 15.4 
Right of use assets - operating35.0 46.8 
Other assets101.5 81.7 
Total assets$2,347.9 $2,009.1 
Liabilities and stockholders' equity
Liabilities
Secured financing$525.5 $246.4 
Asset-backed notes at fair value 1,162.9 1,167.3 
Lease liabilities43.5 49.7 
Other liabilities104.5 79.3 
Total liabilities1,836.5 1,542.7 
Stockholders' equity
Common stock— — 
Common stock, additional paid-in capital448.2 436.5 
Accumulated other comprehensive loss(0.2)(0.3)
Retained earnings69.7 36.4 
Treasury stock(6.3)(6.3)
Total stockholders’ equity511.4 466.4 
Total liabilities and stockholders' equity$2,347.9 $2,009.1 

Note: Numbers may not foot or cross-foot due to rounding.

7


Oportun Financial Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Cash flows from operating activities
Net income (loss)$23.0 $(6.0)$33.2 $(53.6)
Adjustments for non-cash items14.6 45.9 72.8 192.7 
Proceeds from sale of loans in excess of originations of loans sold and held for sale6.2 3.2 15.6 13.1 
Changes in balances of operating assets and liabilities3.3 2.4 (18.0)(12.7)
Net cash provided by operating activities47.1 45.4 103.7 139.4 
Cash flows from investing activities
Net loan principal repayments (loan originations)(249.0)31.6 (295.7)139.5 
Purchase of fixed assets, net of sales(0.7)(0.4)(2.6)(3.6)
Capitalization of system development costs(6.9)(5.4)(18.5)(16.5)
Net cash provided by (used in) investing activities(256.6)25.8 (316.7)119.4 
Cash flows from financing activities
Borrowings745.2 179.0 1,762.8 414.0 
Repayments(669.0)(284.2)(1,491.0)(644.0)
Net stock-based activities(0.8)(0.5)(3.6)(1.4)
Net cash provided by (used in) financing activities75.3 (105.7)268.2 (231.4)
Net increase (decrease) in cash and cash equivalents and restricted cash(134.2)(34.5)55.2 27.3 
Cash and cash equivalents and restricted cash beginning of period358.0 198.0 168.6 136.1 
Cash and cash equivalents and restricted cash end of period$223.8 $163.5 $223.8 $163.5 

Note: Numbers may not foot or cross-foot due to rounding.

8


Oportun Financial Corporation
CONSOLIDATED KEY PERFORMANCE METRICS
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Aggregate Originations (Millions)$662.1 $302.4 $1,430.4 $892.8 
Active Customers (Actuals)772,361 624,205 772,361 624,205 
Customer Acquisition Costs (Actuals)$152 $207 $166 $223 
Managed Principal Balance at End of Period (Millions)
$2,147.9 $1,835.8 $2,147.9 $1,835.8 
30+ Day Delinquency Rate (%)2.8 %3.5 %2.8 %3.5 %
Annualized Net Charge-Off Rate (%)5.5 %10.4 %6.8 %10.0 %
Operating Efficiency (%)70.0 %74.3 %75.8 %66.2 %
Adjusted Operating Efficiency (%)67.1 %63.3 %68.7 %60.1 %
Return on Equity (%)18.3 %(5.3)%9.1 %(15.2)%
Adjusted Return on Equity (%)19.0 %3.7 %14.4 %(9.0)%

Note: Numbers may not foot or cross-foot due to rounding.



Oportun Financial Corporation
OTHER USEFUL METRICS
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Number of loans originated (Actuals)210,731 97,826 479,183 289,169 
Average Daily Principal Balance (Millions)$1,741.4 $1,598.1 $1,654.6 $1,731.7 
Owned Principal Balance at End of Period (Millions)
$1,862.1 $1,572.0 $1,862.1 $1,572.0 

Note: Numbers may not foot or cross-foot due to rounding.
9


Oportun Financial Corporation
ABOUT NON-GAAP FINANCIAL MEASURES
(unaudited)

The press release dated November 3, 2021 contains non-GAAP financial measures. The following tables reconcile the non-GAAP financial measures in that press release to the most directly comparable financial measures prepared in accordance with GAAP. These non-GAAP financial measures Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Operating Efficiency, Adjusted Return on Equity and Adjusted EPS.

The Company believes that the provision of these non-GAAP financial measures can provide useful measures for period-to-period comparisons of Oportun's core business and useful information to investors and others in understanding and evaluating its operating results. However, non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.

Fair Value Pro Forma
As of January 1, 2021, Oportun no longer has any Fair Value Pro Forma adjustments as there are no longer any amortized cost balances. However, there were Fair Value Pro Forma adjustments related to its asset-backed notes at amortized cost for the three and nine months ended September 30, 2020 as reflected in the following tables. Upon adoption of ASU 2019-05, effective January 1, 2020, the Company elected the fair value option on all remaining loans that had previously been measured at amortized cost. Accordingly, for the three and nine months ended September 30, 2021 and 2020, the Company did not have any loans receivable measured at amortized cost. Therefore, there are no Fair Value Pro Forma adjustments related to assets or revenue as of and for the three or nine months ended September 30, 2021 and 2020.

Adjusted EBITDA
The Company defines Adjusted EBITDA as net income (loss), adjusted for the impact of the Company's election of the fair value option and further adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted EBITDA is an important measure because it allows management, investors and its board of directors to evaluate and compare operating results, including return on capital and operating efficiencies, from period to period by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of Oportun's business, as it removes the effect of income taxes, certain non-cash items, variable charges and timing differences.

The Company believes it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations.
The Company believes it is useful to exclude depreciation and amortization and stock-based compensation expense because they are non-cash charges.
The Company excludes the impact of certain non-recurring charges, such as expenses associated with a litigation reserve, its retail network optimization plan and impairment charges, because it does not believe that these items reflect ongoing business operations. During the last three quarters of 2020 the Company excluded COVID-19 related expenses in its adjustments to derive Adjusted EBITDA. As of January 1, 2021, COVID-19 expenses are no longer being excluded from Adjusted EBITDA because the Company's business practices have been updated to operate in the current environment.
The Company also reverses origination fees for Fair Value Loans, net. The Company believes it is beneficial to exclude the uncollected portion of such origination fees, because such amounts do not represent cash received.
The Company also reverses the fair value mark-to-market adjustment because it is a non-cash adjustment.

Adjusted Net Income (Loss)
The Company defines Adjusted Net Income (Loss) as net income (loss) adjusted for the impact of the Company's election of the fair value option and further adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and Oportun's board of directors to evaluate and compare its operating results, including return on capital and operating efficiencies, from period to period, excluding the after-tax impact of non-cash, stock-based compensation expense and certain non-recurring charges.

The Company believes it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. The Company also includes the impact of normalized income tax expense by applying a normalized statutory tax rate.
The Company believes it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with a litigation reserve, its retail network optimization plan and impairment charges, because it does not believe that these items reflect its ongoing business operations. During the last three quarters of 2020, the Company excluded COVID-19 related expenses in its adjustments to derive Adjusted Net Income. As of January 1, 2021, COVID-19 expenses are no longer being excluded from Adjusted Net Income because the Company's business practices have been updated to operate in the current environment.
The Company believes it is useful to exclude stock-based compensation expense because it is a non-cash charge.

10


Adjusted Operating Efficiency
The Company defines Adjusted Operating Efficiency as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges, such as a litigation reserve, retail network optimization expenses and impairment charges divided by total revenue. During the last three quarters of 2020 the Company included COVID-19 related expenses in its adjustments to derive Adjusted Operating Efficiency. As of January 1, 2021, COVID-19 expenses are no longer being excluded from Adjusted Operating Efficiency because the Company's business practices have been updated to operate in the current environment. The Company believes Adjusted Operating Efficiency is an important measure because it allows management, investors and Oportun's board of directors to evaluate how efficient the Company is at managing costs relative to revenue.

Adjusted Return on Equity
The Company defines Adjusted Return on Equity (“ROE”) as annualized Adjusted Net Income divided by average stockholders’ equity. Average stockholders’ equity is an average of the beginning and ending stockholders’ equity balance for each period. Before January 1, 2021, the Company previously defined Adjusted Return on Equity as annualized Adjusted Net Income divided by average Fair Value Pro Forma total stockholders’ equity. Average Fair Value Pro Forma stockholders’ equity is an average of the beginning and ending Fair Value Pro Forma stockholders’ equity balance for each period. The Company believes Adjusted ROE is an important measure because it allows management, investors and its Board to evaluate the profitability of the business in relation to equity and how well it generates income from the equity available. The Company believes Adjusted ROE is an important measure because it allows management, investors and Oportun's board of directors to evaluate the profitability of the business in relation to equity and how well the Company generates income from the equity available.

Adjusted EPS
The Company defines Adjusted EPS as Adjusted Net Income divided by weighted average diluted shares outstanding.

11


Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)

Three Months Ended September 30, 2021 (1)
Three Months Ended September 30, 2020
As ReportedAs ReportedFV AdjustmentsFV Pro Forma
Revenue:
Interest income$145.4 $128.7 $— $128.7 
Non-interest income13.6 8.0 — $8.0 
Total revenue159.1 136.8  136.8 
Less:
Interest expense10.6 13.4 (0.2)13.2 
Provision (release) for loan losses— — — — 
Net decrease in fair value(9.0)(29.6)(1.6)(31.2)
Net revenue139.5 93.7 (1.4)92.4 
Operating expenses:
Technology and facilities34.2 31.6 — 31.6 
Sales and marketing32.1 20.6 — 20.6 
Personnel29.0 26.7 — 26.7 
Outsourcing and professional fees13.3 11.5 — 11.5 
General, administrative and other2.7 11.1 — 11.1 
Total operating expenses111.4 101.6  101.6 
Income (loss) before taxes28.1 (7.8)(1.4)(9.2)
Income tax expense (benefit)5.1 (1.8)(0.4)(2.2)
Net income (loss)$23.0 $(6.0)$(1.0)$(7.0)


Note: Numbers may not foot or cross-foot due to rounding.












(1) Beginning in 2021 the Company no longer includes any Fair Value Pro Forma adjustments because all loans originated and held for investment and asset-backed notes issued are recorded at fair value. Therefore, the three months ended September 30, 2021 is presented on a GAAP basis and the three months ended September 30, 2020 includes Fair Value Pro Forma adjustments related to its asset-backed notes at amortized cost.
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Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)

Nine Months Ended September 30, 2021 (1)
Nine Months Ended September 30, 2020
As ReportedAs ReportedFV AdjustmentsFV
Pro Forma
Revenue:
Interest income$401.2 $415.5 $— $415.5 
Non-interest income31.4 27.4 — 27.4 
Total revenue432.7 442.9  442.9 
Less:
Interest expense36.2 44.9 (0.9)44.0 
Provision (release) for loan losses— — — — 
Net decrease in fair value(26.5)(177.6)0.7 (176.9)
Net revenue370.0 220.4 1.6 222.0 
Operating expenses:
Technology and facilities100.3 93.9 — 93.9 
Sales and marketing79.7 65.5 — 65.5 
Personnel84.4 79.9 — 79.9 
Outsourcing and professional fees40.8 36.2 — 36.2 
General, administrative and other22.9 17.6 — 17.6 
Total operating expenses328.1 293.2  293.2 
Income (loss) before taxes41.9 (72.8)1.6 (71.2)
Income tax expense (benefit)8.7 (19.2)0.7 (18.5)
Net income (loss)$33.2 $(53.6)$0.9 $(52.7)

Note: Numbers may not foot or cross-foot due to rounding.
















(1) Beginning in 2021 the Company no longer includes any Fair Value Pro Forma adjustments because all loans originated and held for investment and asset-backed notes issued are recorded at fair value. Therefore, the nine months ended September 30, 2021 is presented on a GAAP basis and the nine months ended September 30, 2020 includes Fair Value Pro Forma adjustments related to its asset-backed notes at amortized cost.
13


Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
September 30, 2021 (1)
September 30, 2020
As ReportedAs ReportedFV AdjustmentsFV Pro Forma
Assets
Cash and cash equivalents$168.4 $109.7 $— $109.7 
Restricted cash55.3 53.8 — 53.8 
Loans receivable1,971.4 1,605.4 — 1,605.4 
Other assets152.8 148.7 — 148.7 
Total assets2,347.9 1,917.5  1,917.5 
Liabilities
Total debt1,688.4 1,316.6 — 1,316.6 
Other liabilities
148.0 147.9 0.7 148.6 
Total liabilities
1,836.5 1,464.5 0.7 1,465.2 
Total stockholders' equity511.4 453.0 (0.7)452.3 
Total liabilities and stockholders' equity$2,347.9 $1,917.5 $ $1,917.5 


Note: Numbers may not foot or cross-foot due to rounding.

























(1) Beginning in 2021 the Company no longer includes any Fair Value Pro Forma adjustments because all loans originated and held for investment and asset-backed notes issued are recorded at fair value. Therefore, the balances as of September 30, 2021 are presented on a GAAP basis and the balances as of September 30, 2020 include Fair Value Pro Forma adjustments related to its asset-backed notes at amortized cost.
14


Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjusted EBITDA2021202020212020
Net income (loss)$23.0 $(6.0)$33.2 $(53.6)
Adjustments:
Fair Value Pro Forma net income adjustment (1)
— (1.0)— 0.9 
Income tax expense (benefit)5.1 (2.2)8.7 (18.5)
COVID-19 expenses (2)
— 1.0 — 4.1 
Depreciation and amortization5.7 5.1 17.0 14.9 
Impairment (3)
— — 3.3 — 
Stock-based compensation expense4.6 5.2 14.5 14.3 
Litigation reserve— 8.8 — 8.8 
Retail network optimization expenses
0.1 — 12.8 — 
Origination fees for Fair Value Loans, net(5.9)(1.3)(9.1)3.5 
Fair value mark-to-market adjustment (14.6)(10.7)(57.2)47.8 
Adjusted EBITDA$18.1 $(1.2)$23.3 $22.1 

Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjusted Net Income (Loss)2021202020212020
Net income (loss)$23.0 $(6.0)$33.2 $(53.6)
Adjustments:
Fair Value Pro Forma net income adjustment (1)
— (1.0)— 0.9 
Income tax expense (benefit)5.1 (2.2)8.7 (18.5)
COVID-19 expenses (2)
— 1.0 — 4.1 
Impairment (3)
— — 3.3 — 
Stock-based compensation expense4.6 5.2 14.5 14.3 
Litigation reserve— 8.8 — 8.8 
Retail network optimization expenses
0.1 — 12.8 — 
Adjusted income (loss) before taxes32.8 5.7 72.6 (44.1)
Normalized income tax expense (benefit)9.0 1.6 19.9 (12.3)
Adjusted Net Income (Loss)$23.8 $4.2 $52.7 $(31.7)

Note: Numbers may not foot or cross-foot due to rounding.















(1) Beginning in 2021 the Company no longer includes any Fair Value Pro Forma adjustments because all loans originated and held for investment and asset-backed notes issued are recorded at fair value.
(2) As of January 1, 2021, COVID-19 expenses are no longer being excluded from Adjusted EBITDA or Adjusted Net Income because the Company's business practices have been updated to operate in the current environment.
(3) Impairment charge recognized on a right-of-use asset related to the Company's leased office space in San Carlos, California due to management's decision to move toward a remote-first work environment.
15


Oportun Financial Corporation
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except share and per share data, unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
GAAP Earnings (Loss) per Share2021202020212020
Net income (loss)$23.0 $(6.0)$33.2 $(53.6)
Net income (loss) attributable to common stockholders$23.0 $(6.0)$33.2 $(53.6)
Basic weighted-average common shares outstanding28,167,686 27,459,192 27,982,273 27,237,246 
Weighted average effect of dilutive securities:
Stock options1,451,687 — 1,351,288 — 
Restricted stock units884,400 — 726,114 — 
Diluted weighted-average common shares outstanding30,503,773 27,459,192 30,059,675 27,237,246 
Earnings (loss) per share:
Basic$0.82 $(0.22)$1.19 $(1.97)
Diluted$0.75 $(0.22)$1.11 $(1.97)

Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjusted Earnings (Loss) Per Share2021202020212020
Diluted earnings (loss) per share$0.75 $(0.22)$1.11 $(1.97)
Adjusted Net Income (Loss)$23.8 $4.2 $52.7 $(31.7)
Basic weighted-average common shares outstanding28,167,686 27,459,192 27,982,273 27,237,246 
Weighted average effect of dilutive securities:
Stock options1,451,687 1,188,396 1,351,288 — 
Restricted stock units884,400 75,282 726,114 — 
Diluted adjusted weighted-average common shares outstanding30,503,773 28,722,870 30,059,675 27,237,246 
Adjusted Earnings (Loss) Per Share$0.78 $0.15 $1.75 $(1.17)



Note: Numbers may not foot or cross-foot due to rounding.

16


Oportun Financial Corporation
RECONCILIATION OF FORWARD LOOKING NON-GAAP FINANCIAL MEASURES
(in millions, unaudited)

4Q 2021FY 2021
LowHighLowHigh
Adjusted EBITDA
Net income$16.7 $18.6 $49.9 $51.8 
Adjustments:
Income tax expense7.68.116.316.7
Depreciation and amortization6.07.723.024.7
Impairment3.33.3
Stock-based compensation expense3.23.717.818.3
Retail network optimization expenses
12.812.8
Origination fees for Fair Value Loans, net(8.2)(6.2)(17.3)(15.3)
Fair value mark-to-market adjustment (17.2)(21.7)(74.5)(79.0)
Adjusted EBITDA$8.1 $10.1 $31.3 $33.3 

4Q 2021FY 2021
LowHighLowLow
Adjusted Net Income
Net income$16.7 $18.6 $49.9 51.8
Adjustments:
Income tax expense7.68.116.316.7
Impairment3.33.3
Stock-based compensation expense3.23.717.818.3
Retail network optimization expenses
— — 12.8 12.8 
Adjusted income before taxes27.6 30.4 100.1 102.9 
Normalized income tax expense7.5 8.3 27.4 28.2 
Adjusted Net Income (1)
$20.0 $22.1 $72.7 $74.7 

Note: Numbers may not foot or cross-foot due to rounding.

(1) Management's guidance assumes the following:

With respect to 4Q 2021 and FY2021, for loans which are projected to have a weighted average life of 0.76 years, the Company is assuming a December 31, 2021 interpolated LIBOR/Swap rate of 0.31%, based on the forward rates from October 27, 2021. For notes, which have original terms of 2 or 3 years, the Company interpolates between the forward swap rates. The Company is assuming a December 31, 2021 interpolated LIBOR/Swap rate of 0.78%, based on the forward rates from October 27, 2021.

17