oprt-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-39050

OPORTUN FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		45-3361983
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

2 Circle Star Way
San Carlos,	CA	94070
Address of Principal Executive Offices		Zip Code

(650) 810-8823

Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	OPRT	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of May 3, 2024 was 35,589,254.


TABLE OF CONTENTS

PART I ‑ FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Changes in Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flow	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II ‑ OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68

	GLOSSARY	69

Item 6.	Exhibit s	71

Signature		73

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	March 31,		December 31,
	2024		2023
Assets
Cash and cash equivalents	$	69,200	$	91,187
Restricted cash	127,353		114,829
Loans receivable at fair value	2,841,525		2,962,352







Capitalized software and other intangibles, net	106,370		114,735

Right of use assets - operating	18,915		21,105

Other assets	114,138		107,680
Total assets	$	3,277,501	$	3,411,888

Liabilities and stockholders' equity
Liabilities
Secured financing	$	72,106	$	289,951
Asset-backed notes at fair value	1,701,854		1,780,005
Asset-backed borrowings at amortized cost	787,524		581,468
Acquisition and corporate financing	243,413		258,746

Lease liabilities	25,472		28,376

Other liabilities	65,160		68,938
Total liabilities	2,895,529		3,007,484
Stockholders' equity


Common stock, $0.0001 par value - 1,000,000,000 shares authorized at March 31, 2024 and December 31, 2023; 35,861,277 shares issued and 35,589,254 shares outstanding at March 31, 2024; 34,741,076 shares issued and 34,469,053 shares outstanding at December 31, 2023	7		7
Common stock, additional paid-in capital	588,562		584,555


Retained deficit	(200,288)		(173,849)
Treasury stock at cost, 272,023 shares at March 31, 2024 and December 31, 2023	(6,309)		(6,309)
Total stockholders’ equity	381,972		404,404
Total liabilities and stockholders' equity	$	3,277,501	$	3,411,888

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended March 31,
	2024		2023
Revenue
Interest income	$	230,590	$	237,619
Non-interest income	19,892		21,893
Total revenue	250,482		259,512
Less:
Interest expense	54,465		38,997

Net decrease in fair value	(116,850)		(215,710)
Net revenue	79,167		4,805

Operating expenses:
Technology and facilities	47,105		56,874
Sales and marketing	16,003		19,182
Personnel	24,516		37,318
Outsourcing and professional fees	10,241		13,802
General, administrative and other	11,777		19,162

Total operating expenses	109,642		146,338

Income (loss) before taxes	(30,475)		(141,533)
Income tax benefit	(4,036)		(39,443)
Net loss	$	(26,439)	$	(102,090)

Net income (loss) attributable to common stockholders	$	(26,439)	$	(102,090)

Share data:
Earnings (loss) per share:
Basic	$	(0.68)	$	(3.00)
Diluted	$	(0.68)	$	(3.00)
Weighted average common shares outstanding:
Basic	38,900,876		33,979,050
Diluted	38,900,876		33,979,050

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(in thousands, except share data)


For the Three Months Ended March 31, 2024
	Warrants	Common Stock
			Shares	Additional Paid-in Capital		Shares	Par Value		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Treasury Stock		Total Stockholders' Equity
Balance – January 1, 2024			4,193,453	$	19,431	34,469,053	$	7	$	565,124	$	(173,849)	$	(6,309)	$	404,404




Stock-based compensation expense			—	—		—	—		4,239		—		—		4,239



Vesting of restricted stock units, net of shares withheld			—	—		1,120,201	—		(232)		—		—		(232)




Net loss			—	—		—	—		—		(26,439)		—		(26,439)
Balance – March 31, 2024			4,193,453	$	19,431	35,589,254	$	7	$	569,131	$	(200,288)	$	(6,309)	$	381,972

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(in thousands, except share data)


For the Three Months Ended March 31, 2023
	Warrants	Common Stock
		Shares	Additional Paid-in Capital		Shares	Par Value		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Total Stockholders' Equity
Balance – January 1, 2023		—	$	—	33,354,607	$	7	$	547,799	$	6,102	$	(6,309)	$	547,599




Stock-based compensation expense		—	—		—	—		5,329		—		—		5,329



Vesting of restricted stock units, net of shares withheld		—	—		529,739	—		(1,364)		—		—		(1,364)




Issuance of warrants to purchase common stock in connection with debt financing		2,096,727	6,672		—	—		—		—		—		6,672
Net loss		—	—		—	—		—		(102,090)		—		(102,090)
Balance – March 31, 2023		2,096,727	$	6,672	33,884,346	$	7	$	551,764	$	(95,988)	$	(6,309)	$	456,146

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Statements of Cash Flow (Unaudited)

(in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(26,439)	$	(102,090)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,198		13,389

Fair value adjustment, net	116,850		215,710
Origination fees for loans receivable at fair value, net	(1,597)		(4,743)
Gain on loan sales	(1,501)		(1,352)
Stock-based compensation expense	3,982		4,878


Other, net	(2,693)		(34,564)
Originations of loans sold and held for sale	(22,235)		(10,032)
Proceeds from sale of loans	23,355		11,125
Changes in operating assets and liabilities	(17,038)		(15,507)




Net cash provided by operating activities	85,882		76,814
Cash flows from investing activities
Originations and purchases of loans held for investment	(298,139)		(376,280)
Proceeds from loan sales originated as held for investment	1,393		1,041
Repayments of loan principal	336,428		348,104
Capitalization of system development costs	(3,097)		(11,743)


Other, net	(124)		(770)

Net cash provided by (used in) investing activities	36,461		(39,648)
Cash flows from financing activities
Borrowings under secured financing	—		87,900

Repayments of secured financing	(218,246)		(2,614)

Repayments of asset-backed notes at fair value	(105,273)		(136,369)
Borrowings under asset-backed borrowings at amortized cost	260,265		—
Repayments of asset-backed borrowings at amortized cost	(48,746)		—
Borrowings under acquisition and corporate financing	—		17,723

Repayments of acquisition and corporate financing	(17,147)		(10,195)
Payments of deferred financing costs	(2,427)		(775)
Borrowings allocated to warrants	—		6,632
Net payments related to stock-based activities	(232)		(1,364)
Net cash used in financing activities	(131,806)		(39,062)
Net decrease in cash and cash equivalents and restricted cash	(9,463)		(1,896)
Cash and cash equivalents and restricted cash, beginning of period	206,016		203,817
Cash and cash equivalents and restricted cash, end of period	$	196,553	$	201,921

Supplemental disclosure of cash flow information
Cash and cash equivalents	$	69,200	$	74,075
Restricted cash	127,353		127,846
Total cash and cash equivalents and restricted cash	$	196,553	$	201,921

Cash paid for income taxes, net of refunds	$	(680)	$	307
Cash paid for interest	$	56,657	$	37,459
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,328	$	3,725
Supplemental disclosures of non-cash investing and financing activities
Right of use assets obtained in exchange for operating lease obligations	$	164	$	1,179



Non-cash investments in capitalized assets	$	739	$	(1,143)
Non-cash financing activities	$	(1,649)	$	6,672

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Notes to the Condensed Consolidated Financial Statements (Unaudited)

March 31, 2024


1.			Organization and Description of Business

Oportun Financial Corporation (together with its subsidiaries unless the context indicates otherwise, "Oportun" or the "Company") is a mission driven fintech that puts its members’ financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, the Company empowers members with the confidence to build a better financial future. Oportun takes a holistic approach to serving its members and views as its purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a path to a financially healthy life. Oportun offers access to a comprehensive suite of products powered by A.I., offered either directly or through partners, including unsecured and secured lending, and savings. The Company is headquartered in San Carlos, California. The Company has been certified by the United States Department of the Treasury as a Community Development Financial Institution ("CDFI") since 2009.

Segments

Segments are defined as components of an enterprise for which discrete financial information is available and evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer and the Company's Chief Financial Officer are collectively considered to be the CODM. The CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company’s operations constitute a single reportable segment.


2.			Summary of Significant Accounting Policies

Basis of Presentation ‑ The Company meets the SEC's definition of a “Smaller Reporting Company”, and therefore qualifies for the SEC's reduced disclosure requirements for smaller reporting companies. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These statements are unaudited and reflect all normal, recurring adjustments that are, in management's opinion, necessary for the fair presentation of results. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain prior-period financial information has been reclassified to conform to current period presentation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), filed with the Securities and Exchange Commission ("SEC") on March 15, 2024.

Use of Estimates ‑ The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from those estimates and assumptions.

Accounting Policies - There have been no changes to the Company's significant accounting policies from those described in Part II, Item 8 - Financial Statements and Supplementary Data in the Annual Report, except for the new accounting pronouncements subsequently adopted as noted below.

Recently Adopted Accounting Standards

None.

Accounting Standards to be Adopted

Income Taxes - In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU requires entities to disclose in their rate reconciliation table additional categories or information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold and requires annual disclosure of income taxes paid to be disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company has evaluated the effect of the new guidance and determined the ASU expands tax disclosures but it will not have a material impact on the consolidated financial statements.

Segment Reporting - In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The ASU enhances disclosures about significant segment expenses, provides new segment disclosure requirements for entities with a single reportable segment, enhances interim disclosure requirements, clarifies circumstances in which an entity is permitted to disclose multiple segment measures of profit or loss and other disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company has evaluated the effect of the new guidance and determined that the expanded segment disclosures will not have a material impact on the consolidated financial statements.


3.			Earnings (Loss) per Share

Basic and diluted earnings (loss) per share are calculated as follows:


	Three Months Ended March 31,
(in thousands, except share and per share data)	2024		2023
Net loss	$	(26,439)	$	(102,090)


Net income (loss) attributable to common stockholders	$	(26,439)	$	(102,090)

Basic weighted-average common shares outstanding	38,900,876		33,979,050
Weighted average effect of dilutive securities:



Diluted weighted-average common shares outstanding	38,900,876		33,979,050

Earnings (loss) per share:
Basic	$	(0.68)	$	(3.00)
Diluted	$	(0.68)	$	(3.00)

The following common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented:


	Three Months Ended March 31,
	2024	2023
Stock options	2,543,871	3,261,871
Restricted stock units	3,626,101	3,953,396


Total anti-dilutive common share equivalents	6,169,972	7,215,267


4.			Variable Interest Entities

Variable interest entities ("VIEs") are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of equity investment at risk lack the ability to direct the entity's activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.

For all VIEs in which the Company is involved, it assesses whether it is the primary beneficiary of the VIE on an ongoing basis. In circumstances where the Company has both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, it would conclude that it is the primary beneficiary of the VIE, and it consolidates the VIE. In situations where the Company is not deemed to be the primary beneficiary of the VIE, it does not consolidate the VIE and only recognizes its interests in the VIE. In addition, on June 16, 2023 and August 3, 2023, the Company entered into forward flow whole loan sale agreements that are considered secured borrowings and are not considered VIEs. See Note 8, Borrowings for additional information on the secured borrowing under the caption of asset-backed borrowings at amortized cost.

Consolidated VIEs

As part of the Company’s overall funding strategy, the Company transfers a pool of designated loans receivable to wholly owned special-purpose subsidiaries to collateralize certain asset-backed financing transactions. For these VIEs where the Company has determined that it is the primary beneficiary because it has the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb the losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs, the VIEs assets and related liabilities are consolidated with the results of the Company. Such power arises from the Company’s contractual right to service the loans receivable securing the VIEs’ asset-backed debt obligations. The Company has an obligation to absorb losses or the right to receive benefits that are potentially significant to the VIEs because it retains the residual interest of each asset-backed financing transaction in the form of an asset-backed certificate. Accordingly, the Company includes the VIEs’ assets, including the assets securing the financing transactions, and related liabilities in its condensed consolidated financial statements.

Each consolidated VIE issues a series of asset-backed securities that are supported by the cash flows arising from the loans receivable securing such debt. Cash inflows arising from such loans receivable are distributed monthly to the transaction’s lenders and related service providers in accordance with the transaction’s contractual priority of payments. The creditors of the VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets. The Company retains the most subordinated economic interest in each financing transaction through its ownership of the respective residual interest in each VIE. The Company has no obligation to repurchase loans receivable that initially satisfied the financing transaction’s eligibility criteria but subsequently became delinquent or a defaulted loans receivable.

The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s Condensed Consolidated Balance Sheets (Unaudited):


	March 31,		December 31,
(in thousands)	2024		2023
Consolidated VIE assets
Restricted cash	$	104,118	$	91,466
Loans receivable at fair value	2,393,160		2,539,186


Total VIE assets	2,497,278		2,630,652
Consolidated VIE liabilities
Secured financing (1)	72,702		290,949
Asset-backed notes at fair value	1,701,854		1,780,005
Asset-backed borrowings at amortized cost	383,856		195,057
Acquisition financing (1)	45,790		57,237
Total VIE liabilities	$	2,204,202	$	2,323,248

(1) Amounts exclude deferred financing costs. See Note 8, Borrowings for additional information.


5.			Loans Held for Sale and Loans Sold

Other Loan Sales - The Company enters into agreements to sell certain populations of its personal loans and credit card receivables from time to time, including non-performing loans and credit card receivables originated as held for investment. The sold loans were accounted for under the fair value option. The loan sales qualified for sale accounting treatment and the Company derecognized these loans from its Condensed Consolidated Balance Sheets (Unaudited) at the end of the quarter in which the loans were sold.

Whole Loan Sale Program ‑ The Company enters into whole loan sale agreements with third parties in which we agree to sell newly originated unsecured personal loans and secured personal loans.

The originations of loans sold and held for sale during the three months ended March 31, 2024 was $22.2 million and the Company recorded a gain on sale of $1.5 million and servicing revenue of $1.6 million. The originations of loans sold and held for sale during the three months ended March 31, 2023 was $10.0 million. The gain on sale recorded during the three months ended March 31, 2023 was $1.4 million. Servicing revenue during the same time period was $3.0 million.


6.			Capitalized Software and Other Intangibles

Capitalized software, net consists of the following:


	March 31,		December 31,
(in thousands)	2024		2023
Capitalized software, net:
System development costs	$	162,357	$	158,577
Acquired developed technology	48,500		48,500
Less: Accumulated amortization	(130,038)		(119,810)
Total capitalized software, net	$	80,819	$	87,267

Capitalized software, net

Amortization of system development costs and acquired developed technology for three months ended March 31, 2024 and 2023 was $10.2 million and $10.1 million, respectively. System development costs capitalized in the three months ended March 31, 2024 and 2023 were $3.8 million and $10.6 million, respectively.

Acquired developed technology was $48.5 million and is related to the acquisition of Digit on December 22, 2021.

Intangible Assets

The gross carrying amount and accumulated amortization, in total and by major intangible asset class are as follows:


	March 31,		December 31,
(in thousands)	2024		2023
Intangible assets:
Member relationships	$	34,500	$	34,500
Trademarks	5,626		5,626
Other	3,000		3,000
Less: Accumulated amortization	(17,575)		(15,658)
Total intangible assets, net	$	25,551	$	27,468

Amortization of intangible assets for the three months ended March 31, 2024 and 2023 was $1.9 million and $1.6 million, respectively. On March 8, 2023, the Company revealed its rebranding of Oportun and Digit as a single brand. Therefore, the Company wrote off its $0.8 million Digit trademark.

Expected future amortization expense for intangible assets as of March 31, 2024 is as follows:


(in thousands)	Fiscal Years
2024 (remaining nine months)	$	5,621
2025	4,929
2026	4,929
2027	4,929
2028	4,780
2029	—
Thereafter	—
Total	$	25,188


7.			Other Assets

Other assets consist of the following:


	March 31,		December 31,
(in thousands)	2024		2023
Fixed assets
Total fixed assets	$	48,067	$	48,944
Less: Accumulated depreciation	(42,050)		(41,953)
Total fixed assets, net	$	6,017	$	6,991

Other Assets


Prepaid expenses	$	15,600	$	15,758
Deferred tax assets	52,899		48,123
Current tax assets	3,382		4,731
Receivable from banking partner	5,666		4,050
Derivative asset	10,482		9,307
Other	20,092		18,720
Total other assets	$	114,138	$	107,680

Fixed Assets

Depreciation and amortization expense related to fixed assets for the three months ended March 31, 2024 and 2023 was $1.1 million and $1.3 million, respectively.


8.			Borrowings

Secured Financing

The following table presents information regarding the Company's Secured Financing facilities:


					March 31, 2024		December 31, 2023
Variable Interest Entity	Facility Amount		Maturity Date	Interest Rate	Balance		Balance
(in thousands)
Oportun CCW Trust (1)	$	80,000	December 1, 2024	Adjusted SOFR + 3.41%	$	63,559	$	68,409
Oportun PLW Trust	600,000		September 1, 2024	Adjusted SOFR + 2.17%	8,547		221,542
Total secured financing	$	680,000			$	72,106	$	289,951

(1) As of December 31, 2023, the facility amount of the Secured Financing - CCW facility (Oportun CCW Trust) was $100.0 million.

On January 31, 2024, the Company entered into an amendment to the Credit Card Warehouse facility to reduce the commitment amount from $100.0 million to $80.0 million and adjusted the minimum payment rate requirement, advance rate, and the amount of other loan sales permissable.

Asset-backed Notes at Fair Value

The following table presents information regarding asset-backed notes:


	March 31, 2024
Variable Interest Entity	Initial note amount issued (1)		Initial collateral balance (2)		Current balance (1)		Current collateral balance (2)		Weighted average interest rate(3)		Original revolving period (4)
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2022-3)	$	300,000	$	310,993	$	119,021	$	134,299	9.82	%	N/A
Oportun Issuance Trust (Series 2022-2)	400,000		410,212		104,276		120,674		9.23	%	N/A
Oportun Issuance Trust (Series 2022-A)	400,000		410,211		394,163		415,310		5.43	%	2 years
Oportun Issuance Trust (Series 2021-C)	500,000		512,762		470,738		519,122		2.47	%	3 years
Oportun Issuance Trust (Series 2021-B)	500,000		512,759		472,928		518,830		2.04	%	3 years
Oportun Funding XIV, LLC (Series 2021-A)	375,000		383,632		140,728		155,838		1.78	%	2 years

Total asset-backed notes recorded at fair value	$	2,475,000	$	2,540,569	$	1,701,854	$	1,864,073


	December 31, 2023
Variable Interest Entity	Initial note amount issued (1)		Initial collateral balance (2)		Current balance (1)		Current collateral balance (2)		Weighted average interest rate(3)		Original revolving period (4)
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2022-3)	$	300,000	$	310,993	$	145,732	$	165,079	9.34	%	N/A
Oportun Issuance Trust (Series 2022-2)	400,000		410,212		135,825		156,027		8.46	%	N/A
Oportun Issuance Trust (Series 2022-A)	400,000		410,211		390,755		415,448		5.44	%	2 years
Oportun Issuance Trust (Series 2021-C)	500,000		512,762		459,212		519,612		2.47	%	3 years
Oportun Issuance Trust (Series 2021-B)	500,000		512,759		466,317		519,115		2.05	%	3 years
Oportun Funding XIV, LLC (Series 2021-A)	375,000		383,632		182,164		200,758		1.78	%	2 years
Oportun Funding XIII, LLC (Series 2019-A)	279,412		294,118		—		—		—	%	3 years




Total asset-backed notes recorded at fair value	$	2,754,412	$	2,834,687	$	1,780,005	$	1,976,039

(1)Initial note amount issued includes notes retained by the Company as applicable. The current balances are measured at fair value for asset-backed notes recorded at fair value.

(2)Includes the unpaid principal balance of loans receivable, the balance of required reserve funds, cash, cash equivalents and restricted cash pledged by the Company.

(3)Weighted average interest rate excludes notes retained by the Company. There were no notes retained by the Company as of March 31, 2024. The weighted average interest rate for Series 2022-2 and Series 2022-3 will change over time as the notes pay sequentially (in class priority order).

(4)The revolving period for Series 2021-A ended on March 1, 2023. These asset-backed notes have been amortizing since then. Series 2022-2 and Series 2022-3 are both amortizing deals with no revolving period.

Asset-backed Borrowings at Amortized Cost

The following table represents information regarding the Company's Asset-backed borrowings at amortized cost:


	March 31, 2024				December 31, 2023
	Balance				Balance
Asset-backed borrowings at amortized cost	Pledged Asset (1)		Associated Liability		Pledged Asset (1)		Associated Liability
(in thousands)
Oportun Issuance Trust 2024-1	$	190,033	$	188,608	$	—	$	—
Oportun CL Trust 2023-A	197,390		195,248		197,390		195,057
Other Asset Backed Borrowings	402,124		403,668		382,712		386,411
Total asset-backed borrowings recorded at amortized cost:	$	789,547	$	787,524	$	580,102	$	581,468

(1) The amount of pledged assets are recognized within the Loans Receivable at Fair Value within the Consolidated Balance Sheet.

On February 13, 2024, the Company announced the issuance of $199.5 million of Series 2024-1 fixed-rate asset-backed notes secured by a pool of its unsecured and secured personal installment loans (the "2024-1 Securitization"). The 2024-1 Securitization included four classes of fixed rate notes. The notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 8.600% per annum and weighted average coupon of 8.434% per annum.

Acquisition and Corporate Financing

The following table presents information regarding the Company's Acquisition and Corporate Financings:


					March 31, 2024		December 31, 2023
Entity	Original Balance		Maturity Date	Interest Rate	Balance		Balance
(in thousands)
Oportun Financial Corporation (1)	$	150,000	September 14, 2026	SOFR (minimum of 0.00%) + 12.00%	$	200,098	$	204,100
Oportun RF, LLC (2)	116,000		January 10, 2025	SOFR (minimum of 0.00%) + 11.00%	43,315		54,646
Total acquisition and corporate financings	$	266,000			$	243,413	$	258,746

(1) The Corporate Financing facility (Oportun Financial Corporation) was upsized and amended on March 10, 2023 to provide the ability to be able to borrow up to an additional $75.0 million.

(2) As of December 31, 2023, the maturity date of the Acquisition Financing facility (Oportun RF, LLC) was October 10, 2024.

Amendments to Corporate Financing

On March 12, 2024, the Company entered into Amendment No. 3 to the Corporate Financing (the “Third Amendment”), by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain affiliates of Neuberger Berman Specialty Finance as lenders, and the Agent. The Third Amendment includes modifications to the minimum asset coverage ratio covenant levels, provides for an interest rate step-up of 3.00% per annum for certain months beginning in August 2024 in which the asset coverage ratio is less than 1.00 to 1.00, and requires certain principal payments in amounts equal to $5.7 million per month to be made on the last business day of each of March, April and May 2024. In addition, the Third Amendment requires principal payments equal to 100% of the net cash proceeds of any indebtedness junior in priority to the obligations under the Corporate Financing.

Amendments to Acquisition Financing

On March 8, 2024, the Acquisition Financing facility (Oportun RF, LLC) was amended to provide for a three-month principal payment holiday for the months of March, April and May 2024, in amounts equal to $5.7 million per month. In addition, the amendment extended the term of the Acquisition Financing facility to January 10, 2025.

See Note 10, Stockholders' Equity for additional information on the Warrants.

As of March 31, 2024, and December 31, 2023, the Company was in compliance with all covenants and requirements of the Secured Financing, Acquisition and Corporate Financing facilities and asset-backed notes.


9.			Other Liabilities

Other liabilities consist of the following:


	March 31,		December 31,
(in thousands)	2024		2023
Accounts payable	$	6,531	$	5,288
Accrued compensation	11,850		15,359
Accrued expenses	24,861		24,791
Accrued interest	7,843		8,415
Amount due to whole loan buyer	4,031		4,169

Current tax liabilities	7,134		7,139
Other	2,910		3,777
Total other liabilities	$	65,160	$	68,938


10.			Stockholders' Equity

Preferred Stock - The Board has the authority, without further action by the Company's stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Board. There were no shares of undesignated preferred stock issued or outstanding as of March 31, 2024 or December 31, 2023.

Common Stock - As of March 31, 2024 and December 31, 2023, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $0.0001 per share. As of March 31, 2024, 35,861,277 and 35,589,254 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock. As of December 31, 2023, 34,741,076 and 34,469,053 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

Warrants - On March 10, 2023, pursuant to the Second Amendment of the Corporate Financing facility, the Company issued detachable Warrants to the lenders providing the Incremental Tranche A-1 Loans to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $0.01 per share. On March 27, 2023, in connection with the funding of the Incremental Tranche A-2 Loans, the Company issued Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock at an exercise price of $0.01 per share. On May 5, 2023, in connection with the funding of the Incremental Tranche B Loans, the Company issued Warrants to the lenders providing the Incremental Tranche B Loans to purchase 1,048,363 shares of the Company's common stock at an exercise price of $0.01 per share. On June 30, 2023, in connection with the funding of the Incremental Tranche C Loans, the Company issued Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363 shares of the Company’s common stock at an exercise price of $0.01 per share.

See Liquidity and Capital Resources section for additional information on the Second Amendment of the Corporate Financing facility.


11.			Equity Compensation and Other Benefits

The Company's stock-based plans are described and informational disclosures are provided in the Notes to the Consolidated Financial Statements included in the Annual Report.

Stock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Technology and facilities	$	1,159	$	1,049
Sales and marketing	24		33
Personnel	2,799		3,796
Total stock-based compensation (1)	$	3,982	$	4,878

(1) Amounts shown are net of $0.3 million of capitalized stock-based compensation for the three months ended March 31, 2024 and net of $0.5 million of capitalized stock-based compensation for the three months ended March 31, 2023.

As of March 31, 2024, and December 31, 2023, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $1.9 million and $2.6 million, respectively, which will be recognized over a weighted-average vesting period of approximately 1.9 years for both periods. As of March 31, 2024 and December 31, 2023, the Company's total unrecognized compensation cost related to time-based and performance-based unvested restricted stock unit awards granted to employees was $18.6 million and $24.8 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.0 years and 2.1 years, respectively.

Cash flows from the tax benefits for tax deductions resulting from the exercise of stock options in excess of the compensation expense recorded for those options (excess tax benefits) are required to be classified as cash from financing activities. The Company recognized $1.1 million and

$1.4 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively. Additionally, the total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $1.6 million and $2.4 million for the three months ended March 31, 2024 and 2023, respectively.


12.			Revenue

Interest Income - Total interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Interest income
Interest on loans	$	225,683	$	232,200
Fees on loans	4,907		5,419
Total interest income	230,590		237,619

Non-interest Income - Total non-interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Non-interest income
Gain on loan sales	$	1,501	$	1,326
Servicing fees	3,409		3,680
Subscription revenue	6,519		6,878
Interest on member accounts	4,667		5,228
Other income	3,796		4,781
Total non-interest income	$	19,892	$	21,893


13.			Income Taxes

For the three months ended March 31, 2024 and 2023, the Company calculates its year-to-date income tax expense (benefit) by applying the estimated annual effective tax rate to the year-to-date income from operations before income taxes and adjusts the income tax expense (benefit) for discrete tax items recorded in the period.

During the three months ended March 31, 2024 and 2023, the Company recorded income tax benefit of $4.0 million and $39.4 million, respectively, related to continuing operations. The Company’s reported effective tax rates were 13.2% and 27.9% for the three months ended March 31, 2024 and 2023, respectively.

Income tax benefit decreased by $35.4 million or 89.8%, from $39.4 million for the three months ended March 31, 2023 to $4.0 million for the three months ended March 31, 2024, primarily as a result of having a smaller pretax loss for the three months ended March 31, 2024. The Company's effective tax rates for the three months ended March 31, 2024 differ from the statutory tax rates primarily due to the impacts of the research and development tax credit and stock-based compensation.

The Company’s policy is to recognize interest and penalties associated with income taxes in income tax expense. The Company expects to release $3.6 million of the uncertain tax positions within the next twelve months due to the expiration of various statute of limitations at the end of 2024.

In December 2021, the Organization for Economic Co-operation and Development Inclusive Framework on Base Erosion Profit Shifting released Model Global Anti-Base Erosion rules (“Model Rules”) under Pillar Two. The Model Rules set forth the “common approach” for a Global Minimum Tax at 15 percent for multinational enterprises with a turnover of more than 750 million euros. Rules under Pillar Two were effective from January 1, 2024. The Company does not expect adoption of Pillar Two rules to have a significant impact on its consolidated financial statements during fiscal year 2024.


14.			Fair Value of Financial Instruments

Financial Instruments at Fair Value

The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances for the periods shown:


	March 31, 2024				December 31, 2023
(in thousands)	Unpaid Principal Balance		Fair Value		Unpaid Principal Balance		Fair Value
Assets
Loans receivable - personal loans	$	2,652,473	$	2,744,380	$	2,824,342	$	2,853,186
Loans receivable - credit cards	99,916		97,145		111,145		109,166
Total Loans Receivable at Fair Value	$	2,752,389	$	2,841,525	$	2,935,487	$	2,962,352
Liabilities
Asset-backed notes	1,769,132		1,701,854		1,874,406		1,780,005

The Company calculates the fair value of the asset-backed notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures.

The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value. The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value. The personal loans receivable balance at fair value as of March 31, 2024, consists of $2,624.1 million of unsecured personal loans receivable and $120.3 million of secured personal loans receivable.


	March 31, 2024			December 31, 2023
Personal Loans Receivable	Minimum	Maximum	Weighted Average (2)	Minimum	Maximum	Weighted Average (2)
Remaining cumulative charge-offs (1)	7.77%	50.28%	11.61%	6.87%	51.00%	11.80%
Remaining cumulative prepayments (1)	0.00%	25.70%	21.08%	0.00%	28.17%	23.83%

Average life (years)	0.15	1.33	1.02	0.18	1.37	1.01
Discount rate	9.10%	9.10%	9.10%	10.10%	10.10%	10.10%

(1) Figure disclosed as a percentage of outstanding principal balance.

(2) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of customer, original loan maturity terms).


	March 31, 2024	December 31, 2023
Credit Card Receivables	Range	Range
Remaining cumulative charge-offs (1)	20.24%	20.16%
Principal payment rate (1)	6.65%	7.06%
Average life (years)	1.07	1.00
Discount rate	9.10%	10.20%

(1) Figure disclosed as a percentage of outstanding principal balance.

The Company has derivative instruments in connection with its bank partnership program with Pathward, N.A. related to excess interest proceeds it expects to receive on loans retained by Pathward, N.A. Based on the agreement underlying the bank partnership program, for all loans originated and retained by Pathward, Pathward receives a fixed interest rate. The Company bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreement. The fair value of the derivative instrument as of March 31, 2024 and December 31, 2023, were $10.5 million and $9.3 million, respectively. The underlying cash flows as of March 31, 2024 and December 31, 2023, were $13.6 million and $12.2 million, respectively. The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for derivative instruments presented within Other Assets in the Condensed Consolidated Balance Sheets (Unaudited):


	March 31, 2024			December 31, 2023
	Low	High	Weighted Average	Low	High	Weighted Average
Remaining cumulative charge-offs	0.76%	31.71%	10.24%	1.09%	30.38%	10.56%
Remaining cumulative prepayments	0.00%	3.03%	0.72%	0.01%	3.89%	0.92%
Average life (years)	0.36	2.07	1.70	0.36	2.00	1.64
Discount rate	17.74%	17.74%	17.74%	17.00%	17.00%	17.00%

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the three months ended March 31, 2024 and 2023. Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

For personal loans receivable, the Company developed an internal model to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the model combines receivable characteristics with assumptions about borrower behavior based on the Company’s historical loan performance. These cash flows are then discounted using a required rate of return that management estimates would be used by a market participant.

The Company tested the unsecured personal loan fair value model by comparing modeled cash flows to historical loan performance to ensure that the model was complete, accurate and reasonable for the Company’s use. The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.

For credit card receivables, the Company uses historical data to derive assumptions about certain loan portfolio characteristics such as principal payment rates, interest yields and fee yields. Similar to the model used for personal loans receivable, the Company engaged a third party to create an independent fair value estimate, which provides a range of fair values that are compared for reasonableness.

For the derivative, the Company uses a base set of cash flows derived from historical data and management assumptions. From this base set of cash flows, funds that are projected to be released to the Company according to the contractual terms outlined in the waterfall agreement are calculated on an aggregate basis then discounted at a rate that is representative of equity yield.

The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:


	Three Months Ended March 31,
(in thousands)	2024		2023
Balance – beginning of period	$	2,962,352	$	3,175,449

Principal disbursements	584,162		673,935
Principal and interest payments from members	(596,033)		(621,972)
Other loan sales	(34,857)		(38,209)
Gross charge-offs	(103,037)		(107,406)
Net increase (decrease) in fair value	28,938		(37,319)
Balance – end of period	$	2,841,525	$	3,044,478

As of March 31, 2024, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $6.1 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $36.3 million. As of December 31, 2023, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $5.2 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $41.5 million.

Financial Instruments Disclosed But Not Carried at Fair Value

The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value hierarchy:


	March 31, 2024
	Carrying value		Estimated fair value		Estimated fair value
(in thousands)					Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	69,200	$	69,200	$	69,200	$	—	$	—
Restricted cash	127,353		127,353		127,353		—		—

Loans held for sale (Note 5)	427		395		—		—		395
Liabilities
Accounts payable	6,531		6,531		6,531		—		—
Secured financing (Note 8)	72,702		72,193		—		72,193		—
Asset-backed borrowings at amortized cost (Note 8)(1)	789,547		792,224		—		390,100		402,124
Acquisition and corporate financing (Note 8)	268,516		276,137		—		276,137		—

(1) As of March 31, 2024, the Company estimates the carrying value of the Level 3 other asset-backed borrowings at amortized cost to approximate their fair value as the underlying cash flows and associated assumptions are reviewed and updated each period.


	December 31, 2023
	Carrying value		Estimated fair value		Estimated fair value
(in thousands)					Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	91,187	$	91,187	$	91,187	$	—	$	—
Restricted cash	114,829		114,829		114,829		—		—


Liabilities
Accounts payable	5,288		5,288		5,288		—		—
Secured financing (Note 8)	290,949		285,231		—		285,231		—
Asset-backed borrowings at amortized cost (Note 8)(1)	580,101		580,101		—		—		580,101
Acquisition and corporate financing (Note 8)	285,682		286,865		—		286,865		—

As of December 31, 2023, the Company estimates the carrying value of asset-backed borrowings at amortized cost to approximate their fair value as the underlying cash flows and associated assumptions are reviewed and updated each period.

The Company uses the following methods and assumptions to estimate fair value:

•Cash, cash equivalents, restricted cash and accounts payable ‑ The carrying values of certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash and accounts payable, approximate Level 1 fair values of these financial instruments due to their short-term nature.

•Loans held for sale ‑ The fair values of loans held for sale are based on a negotiated agreement with the purchaser.

•Secured financing, acquisition and corporate financing ‑ The fair values of the secured financing, and acquisition and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

•Asset-backed borrowings at amortized cost ‑ The fair values of the asset-backed borrowings at amortized cost have been calculated by discounting the contractual cash flows at the interest rate the Company estimates such arrangement would bear if executed in the current market, which is a Level 3 input measure.

There were no transfers in or out of Level 3 assets and liabilities for the three months ended March 31, 2024 and 2023 and the year ended December 31, 2023.


15.			Leases, Commitments and Contingencies

Leases - The Company’s leases are primarily for real property consisting of retail locations and office space and have remaining lease terms of 6 years or less.

The Company has elected the practical expedient to keep leases with terms of 12 months or less off the balance sheet as no recognition of a lease liability and a right-of-use asset is required. Operating lease expense is recognized on a straight-line basis over the lease term in "Technology and facilities" in the Condensed Consolidated Statements of Operations (Unaudited).

All of the Company’s existing lease arrangements are classified as operating leases. At the inception of a contract, the Company determines if the contract is or contains a lease. At the commencement date of a lease, the Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing the Company's right to use the underlying asset for the duration of the lease term. The Company’s leases include options to extend or terminate the arrangement at the end of the original lease term. The Company generally does not include renewal or termination options in its assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain. Variable lease payments and short-term lease costs were deemed immaterial. The Company’s leases do not provide an explicit rate. The Company uses its contractual borrowing rate to determine lease discount rates.

As of March 31, 2024, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:


(in thousands)	Operating Leases
Lease expense
2024 (remaining nine months)	$	9,314
2025	10,907
2026	4,808
2027	1,770
2028	543
2029	113
Thereafter	—
Total lease payments	27,455
Imputed interest	(1,983)
Total leases	$	25,472














Weighted average remaining lease term	2.6 years
Weighted average discount rate	4.70		%

As of December 31, 2023, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:


(in thousands)												Operating Leases
Lease expense

2024												12,786
2025												10,851
2026												4,700
2027												1,661
2028												435
2029												40
Thereafter												—
Total lease payments												30,473