oprt-20240630

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 June 30, 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 August 2, 2024 was 35,722,721.


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	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46

PART II ‑ OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	74
Item 5.	Other Information	74

	GLOSSARY	75

Item 6.	Exhibits	76

Signature		77

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	June 30,		December 31,
	2024		2023
Assets
Cash and cash equivalents	$	72,871	$	91,187
Restricted cash	163,765		114,829
Loans receivable at fair value	2,714,410		2,962,352







Credit cards receivable held for sale	55,720		—
Capitalized software and other intangibles, net	99,688		114,735

Right of use assets - operating	9,947		21,105

Other assets	133,960		107,680
Total assets	$	3,250,361	$	3,411,888

Liabilities and stockholders' equity
Liabilities
Secured financing	$	156,436	$	289,951
Asset-backed notes at fair value	1,583,088		1,780,005
Asset-backed borrowings at amortized cost	836,893		581,468
Acquisition and corporate financing	230,382		258,746

Lease liabilities	21,734		28,376

Other liabilities	67,712		68,938
Total liabilities	2,896,245		3,007,484
Stockholders' equity


Common stock, $0.0001 par value - 1,000,000,000 shares authorized at June 30, 2024 and December 31, 2023; 35,994,744 shares issued and 35,722,721 shares outstanding at June 30, 2024; 34,741,076 shares issued and 34,469,053 shares outstanding at December 31, 2023	7		7
Common stock, additional paid-in capital	591,731		584,555


Accumulated deficit	(231,313)		(173,849)
Treasury stock at cost, 272,023 shares at June 30, 2024 and December 31, 2023	(6,309)		(6,309)
Total stockholders’ equity	354,116		404,404
Total liabilities and stockholders' equity	$	3,250,361	$	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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
Interest income	$	231,373	$	240,463	$	461,963	$	478,082
Non-interest income	19,023		26,100		38,915		47,993
Total revenue	250,396		266,563		500,878		526,075
Less:
Interest expense	54,244		41,448		108,709		80,445

Net decrease in fair value	(136,119)		(106,490)		(252,969)		(322,200)
Net revenue	60,033		118,625		139,200		123,430

Operating expenses:
Technology and facilities	40,625		55,116		87,730		111,990
Sales and marketing	16,258		19,195		32,261		38,377
Personnel	21,908		30,762		46,424		68,080
Outsourcing and professional fees	8,375		9,900		18,616		23,702
General, administrative and other	22,016		21,123		33,793		40,285

Total operating expenses	109,182		136,096		218,824		282,434

Income (loss) before taxes	(49,149)		(17,471)		(79,624)		(159,004)
Income tax benefit	(18,124)		(2,572)		(22,160)		(42,015)
Net loss	$	(31,025)	$	(14,899)	$	(57,464)	$	(116,989)

Net income (loss) attributable to common stockholders	$	(31,025)	$	(14,899)	$	(57,464)	$	(116,989)

Share data:
Earnings (loss) per share:
Basic	$	(0.78)	$	(0.41)	$	(1.46)	$	(3.31)
Diluted	$	(0.78)	$	(0.41)	$	(1.46)	$	(3.31)
Weighted average common shares outstanding:
Basic	39,816,996		36,691,291		39,358,936		35,342,663
Diluted	39,816,996		36,691,291		39,358,936		35,342,663

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 Six Months Ended June 30, 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





Stock-based compensation expense			—	—		—	—		3,169		—		—		3,169



Vesting of restricted stock units, net of shares withheld			—	—		133,467	—		—		—		—		—





Net loss			—	—		—	—		—		(31,025)		—		(31,025)
Balance – June 30, 2024			4,193,453	$	19,431	35,722,721	$	7	$	572,300	$	(231,313)	$	(6,309)	$	354,116

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 Six Months Ended June 30, 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

Issuance of common stock upon exercise of stock options, net of shares withheld		—	—		26,458	—		(95)		—		—		(95)



Stock-based compensation expense		—	—		—	—		4,754		—		—		4,754



Vesting of restricted stock units, net of shares withheld		—	—		116,539	—		(267)		—		—		(267)




Issuance of warrants to purchase common stock in connection with debt financing		2,096,726	12,759		—	—		—		—		—		12,759
Net loss		—	—		—	—		—		(14,899)		—		(14,899)
Balance – June 30, 2023		4,193,453	$	19,431	34,027,343	$	7	$	556,156	$	(110,887)	$	(6,309)	$	458,398

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Condensed Consolidated Statements of Cash Flow (Unaudited)

(in thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(57,464)	$	(116,989)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,204		27,158

Fair value adjustment, net	252,969		322,200
Origination fees for loans receivable at fair value, net	(10,140)		(16,981)
Gain on loan sales	(3,608)		(3,693)
Stock-based compensation expense	6,924		9,347


Other, net	(14,191)		(29,910)
Originations of loans sold and held for sale	(50,664)		(25,678)
Proceeds from sale of loans	53,816		29,096
Changes in operating assets and liabilities	(10,237)		(15,193)




Net cash provided by operating activities	193,609		179,357
Cash flows from investing activities
Originations and purchases of loans held for investment	(679,738)		(780,912)
Proceeds from loan sales originated as held for investment	2,240		1,653
Repayments of loan principal	659,232		694,963
Capitalization of system development costs	(8,351)		(18,731)


Other, net	(361)		(994)

Net cash used in investing activities	(26,978)		(104,021)
Cash flows from financing activities
Borrowings under secured financing	89,940		171,300

Repayments of secured financing	(224,193)		(3,140)

Repayments of asset-backed notes at fair value	(225,950)		(330,406)
Borrowings under asset-backed borrowings at amortized cost	397,907		25,544
Repayments of asset-backed borrowings at amortized cost	(136,785)		—
Borrowings under acquisition and corporate financing	—		73,355

Repayments of acquisition and corporate financing	(34,271)		(10,195)
Payments of deferred financing costs	(2,427)		(1,550)

Net payments related to stock-based activities	(232)		(1,726)
Net cash used in financing activities	(136,011)		(76,818)
Net increase (decrease) in cash and cash equivalents and restricted cash	30,620		(1,482)
Cash and cash equivalents and restricted cash, beginning of period	206,016		203,817
Cash and cash equivalents and restricted cash, end of period	$	236,636	$	202,335

Supplemental disclosure of cash flow information
Cash and cash equivalents	$	72,871	$	73,371
Restricted cash	163,765		128,964
Total cash and cash equivalents and restricted cash	$	236,636	$	202,335

Cash paid for income taxes, net of refunds	$	826	$	1,171
Cash paid for interest	$	106,940	$	77,453
Cash paid for amounts included in the measurement of operating lease liabilities	$	6,463	$	7,430
Supplemental disclosures of non-cash investing and financing activities
Right of use assets obtained in exchange for operating lease obligations	$	(6,511)	$	1,979



Non-cash investments in capitalized assets	$	801	$	(507)
Non-cash financing activities	$	16,603	$	19,431

See Notes to the Condensed Consolidated Financial Statements.

OPORTUN FINANCIAL CORPORATION

Notes to the Condensed Consolidated Financial Statements (Unaudited)

June 30, 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 June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	2024		2023		2024		2023
Net loss	$	(31,025)	$	(14,899)	$	(57,464)	$	(116,989)


Net income (loss) attributable to common stockholders	$	(31,025)	$	(14,899)	$	(57,464)	$	(116,989)

Basic weighted-average common shares outstanding	39,816,996		36,691,291		39,358,936		35,342,663
Weighted average effect of dilutive securities:



Diluted weighted-average common shares outstanding	39,816,996		36,691,291		39,358,936		35,342,663

Earnings (loss) per share:
Basic	$	(0.78)	$	(0.41)	$	(1.46)	$	(3.31)
Diluted	$	(0.78)	$	(0.41)	$	(1.46)	$	(3.31)

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 June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Stock options	2,347,491	3,062,442	2,445,681	3,162,156
Restricted stock units	4,058,597	3,730,803	3,842,349	3,842,100


Total anti-dilutive common share equivalents	6,406,088	6,793,245	6,288,030	7,004,256


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):


	June 30,		December 31,
(in thousands)	2024		2023
Consolidated VIE assets
Restricted cash	$	133,945	$	91,466
Loans receivable at fair value	2,185,915		2,539,186


Total VIE assets	2,319,860		2,630,652
Consolidated VIE liabilities
Secured financing (1)	156,696		290,949
Asset-backed notes at fair value	1,583,088		1,780,005
Asset-backed borrowings at amortized cost	345,172		195,057
Acquisition financing (1)	40,066		57,237
Total VIE liabilities	$	2,125,022	$	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 June 30, 2024 was $28.4 million and the Company recorded a gain on sale of $2.1 million and servicing revenue of $1.6 million. The originations of loans sold and held for sale during the three months ended June 30, 2023 was $15.6 million. The gain on sale recorded during the three months ended June 30, 2023 was $2.3 million. Servicing revenue during the same time period was $2.5 million.

The originations of loans sold and held for sale during the six months ended June 30, 2024 was $50.7 million and the Company recorded a gain on sale of $3.6 million and servicing revenue of $3.2 million. The originations of loans sold and held for sale during the six months ended June 30, 2023 was $25.7 million. The gain on sale recorded during the six months ended June 30, 2023 was $3.7 million. Servicing revenue during the same time period was $5.6 million.

Oportun® Visa® Credit Card - On June 21, 2024, the Company entered into a nonbinding letter of intent with a third-party to sell the credit card receivable portfolio originated under the Company's credit card program. Following the execution of the nonbinding letter of intent, the portfolio is considered to be held for sale and is presented within Credit cards receivable held for sale on the Condensed Consolidated Balance Sheet (Unaudited). The Company has elected the fair value option for the credit card portfolio and, as a result, we recorded a net decrease in fair value of $36.2 million associated with the terms contained within the nonbinding letter of intent. The Company has chosen to sell the credit card receivables portfolio because it believes it can achieve higher returns on its capital from allocating it to the Company's other products.


6.			Capitalized Software and Other Intangibles

Capitalized software, net consists of the following:


	June 30,		December 31,
(in thousands)	2024		2023
Capitalized software, net:
System development costs	$	167,726	$	158,577
Acquired developed technology	48,500		48,500
Less: Accumulated amortization	(140,172)		(119,810)
Total capitalized software, net	$	76,054	$	87,267

Capitalized software, net

Amortization of system development costs and acquired developed technology for the three months ended June 30, 2024 and 2023 was $10.1 million and $10.6 million, respectively. System development costs capitalized in the three months ended June 30, 2024 and 2023 were $5.4 million and $7.7 million, respectively.

Amortization of system development costs and acquired developed technology for the six months ended June 30, 2024 and 2023 was $20.4 million and $20.7 million, respectively. System development costs capitalized in the six months ended June 30, 2024 and 2023 were $9.2 million and $18.3 million, respectively.

Acquired developed technology was $48.5 million and is related to the acquisition of Hello Digit, Inc. (“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:


	June 30,		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	(19,492)		(15,658)
Total intangible assets, net	$	23,634	$	27,468

Amortization of intangible assets for the three months ended June 30, 2024 and 2023 was $1.9 million and $1.9 million, respectively. Amortization of intangible assets for the six months ended June 30, 2024 and 2023 was $3.8 million and $3.5 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 June 30, 2024 is as follows:


(in thousands)	Fiscal Years
2024 (remaining six months)	$	3,704
2025	4,929
2026	4,929
2027	4,929
2028	4,780
2029	—
Thereafter	—
Total	$	23,271


7.			Other Assets

Other assets consist of the following:


	June 30,		December 31,
(in thousands)	2024		2023
Fixed assets
Total fixed assets	$	42,683	$	48,944
Less: Accumulated depreciation	(37,763)		(41,953)
Total fixed assets, net	$	4,920	$	6,991

Other Assets


Prepaid expenses	$	13,716	$	15,758
Deferred tax assets, net	71,615		48,123
Current tax assets	4,315		4,731
Receivable from banking partner	3,837		4,050
Derivative asset	11,432		9,307
Other	24,125		18,720
Total other assets	$	133,960	$	107,680

Fixed Assets

Depreciation and amortization expense related to fixed assets for the three months ended June 30, 2024 and 2023 was $1.0 million and $0.9 million, respectively, and for the six months ended June 30, 2024 and 2023 was $2.0 million, and $2.2 million, respectively.

The Company recognized an impairment of the right-of-use asset related to the leased office space in San Carlos, California due to a significant decrease in observed market rents for commercial office space, and the inability to find a sub-lessee given the remaining lease term and market conditions. As a result, the Company disposed of all related fixed assets of $3.7 million and related accumulated depreciation of $3.5 million resulting in a loss on disposal of $0.2 million.


8.			Borrowings

Secured Financing

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


					June 30, 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%	$	57,978	$	68,409
Oportun PLW Trust	600,000		September 1, 2024	Adjusted SOFR + 2.17%	98,458		221,542
Total secured financing	$	680,000			$	156,436	$	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.

Asset-backed Notes at Fair Value

The following table presents information regarding asset-backed notes at fair value:


	June 30, 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	$	93,233	$	106,868	10.35	%	N/A
Oportun Issuance Trust (Series 2022-2)	400,000		410,212		78,006		90,145		9.87	%	N/A
Oportun Issuance Trust (Series 2022-A)	400,000		410,211		394,945		415,204		5.44	%	2 years
Oportun Issuance Trust (Series 2021-C)	500,000		512,762		466,863		519,349		2.48	%	3 years
Oportun Issuance Trust (Series 2021-B)	500,000		512,759		443,817		486,952		2.05	%	3 years
Oportun Funding XIV, LLC (Series 2021-A)	375,000		383,632		106,224		119,066		1.79	%	2 years

Total asset-backed notes recorded at fair value	$	2,475,000	$	2,540,569	$	1,583,088	$	1,737,584


	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 June 30, 2024. The weighted average interest rate for Series 2022-A, 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, Series 2021-B ended on May 1, 2024, and Series 2022-A ended on June 1, 2024. 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:


	June 30, 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	$	150,656	$	149,728	$	—	$	—
Oportun CL Trust 2023-A	197,390		195,444		197,390		195,057
Other Asset Backed Borrowings	488,613		491,721		382,712		386,411
Total asset-backed borrowings recorded at amortized cost:	$	836,659	$	836,893	$	580,102	$	581,468

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

On October 20, 2023, the Company entered into a Receivables Loan and Security Agreement (the “Receivables Loan and Security Agreement”), pursuant to which the Company borrowed $197 million. Borrowings under the Receivables Loan and Security Agreement accrue interest at a weighted average interest rate equal to 10.05%.

Acquisition and Corporate Financing

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


					June 30, 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%	$	192,049	$	204,100
Oportun RF, LLC (2)	116,000		January 10, 2025	SOFR (minimum of 0.00%) + 11.00%	38,333		54,646
Total acquisition and corporate financings	$	266,000			$	230,382	$	258,746

(1) The Corporate Financing facility (Oportun Financial Corporation) was amended and upsized to $75.0 million on March 10, 2023.

(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”). The Third Amendment included modifications to the minimum asset coverage ratio covenant levels, provided 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 required 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 required principal payments equal to 100% of the net cash proceeds of any future issuance of 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 June 30, 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:


	June 30,		December 31,
(in thousands)	2024		2023
Accounts payable	$	9,872	$	5,288
Accrued compensation	10,670		15,359
Accrued expenses	20,521		24,791
Accrued interest	10,117		8,415
Amount due to whole loan buyer	5,795		4,169

Current tax liabilities	7,472		7,139
Other	3,265		3,777
Total other liabilities	$	67,712	$	68,938


10.			Stockholders' Equity

Preferred Stock - The board of directors of the Company (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 June 30, 2024 or December 31, 2023.

Common Stock - As of June 30, 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 June 30, 2024, 35,994,744 and 35,722,721 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 June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Technology and facilities	$	769	$	1,159	$	1,928	$	2,208
Sales and marketing	29		10		53		43
Personnel	2,144		3,300		4,943		7,096
Total stock-based compensation (1)	$	2,942	$	4,469	$	6,924	$	9,347

(1) Amounts shown are net of $0.2 million and $0.5 million of capitalized stock-based compensation for the three and six months ended June 30, 2024, respectively, and net of $0.3 million and $0.7 million of capitalized stock-based compensation for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, and December 31, 2023, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $1.5 million and $2.6 million, respectively, which will be recognized over a weighted-average vesting period of approximately 1.7 years and 1.9 years, respectively. As of June 30, 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 $21.0 million and $24.8 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.2 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 $2.0 million and $2.6 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense during the six months ended June 30, 2024 and 2023, respectively. Additionally, the total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $0.2 million and $1.7 million for the three and six months ended June 30, 2024, respectively. The total income tax expense recognized in the income statement for share-based compensation exercises was $0.3 million and $2.7 million for the three and six months ended June 30, 2023, respectively.


12.			Revenue

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Interest income
Interest on loans	$	228,242	$	236,028	$	453,925	$	468,228
Fees on loans	3,131		4,435		8,038		9,854
Total interest income	231,373		240,463		461,963		478,082

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Non-interest income

Servicing fees	$	3,463	$	3,544	$	6,872	$	7,224
Subscription revenue	5,437		6,301		11,956		13,179
Interest on member accounts	9,029		6,201		13,696		11,429
Gain on loan sales and other	1,094		10,054		6,391		16,161
Total non-interest income	$	19,023	$	26,100	$	38,915	$	47,993


13.			Income Taxes

For the three and six months ended June 30, 2024 and 2023, the Company calculated 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 and six months ended June 30, 2024, the Company recorded income tax benefit of $18.1 million and $22.2 million, respectively, related to continuing operations, representing an effective tax rate of 36.9% and 27.8%, respectively. Income tax benefit for the three and six months ended June 30, 2023 was $2.6 million and $42.0 million, representing an effective income tax rate of 14.7% and 26.4%, respectively.

Income tax benefit increased by $15.6 million or 605%, from $2.6 million for the three months ended June 30, 2023 to $18.1 million benefit for the three months ended June 30, 2024, primarily as a result of having a larger pretax loss for the three months ended June 30, 2024. Income tax benefit decreased by $19.9 million or 47%, from $42.0 million for the six months ended June 30, 2023 to $22.2 million for the six months ended June 30, 2024, primarily as a result of having a lower pretax loss for the six months ended June 30, 2024. The Company's effective tax rates for the three and six months ended June 30, 2024 and 2023 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 unrecognized tax positions in income tax expense. At the end of 2024, the Company expects it will no longer be subject to any significant U.S. federal tax examinations by tax authorities for all years prior to 2021. Thus, the Company expects to release $3.4 million of uncertain tax positions within the next twelve months due to the expiration of various statute of limitations.

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:


	June 30, 2024				December 31, 2023
(in thousands)	Unpaid Principal Balance		Fair Value		Unpaid Principal Balance		Fair Value
Assets
Loans receivable - personal loans	$	2,656,551	$	2,714,410	$	2,824,342	$	2,853,186
Loans receivable - credit cards	—		—		111,145		109,166
Total Loans Receivable at Fair Value	$	2,656,551	$	2,714,410	$	2,935,487	$	2,962,352
Credit cards receivable held for sale	89,713		55,720		—		—
Liabilities
Asset-backed notes	1,648,456		1,583,088		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 June 30, 2024, consists of $2,578.9 million of unsecured personal loans receivable and $135.5 million of secured personal loans receivable.


	June 30, 2024			December 31, 2023
Personal Loans Receivable	Minimum	Maximum	Weighted Average (2)	Minimum	Maximum	Weighted Average (2)
Remaining cumulative charge-offs (1)	7.51%	49.47%	11.57%	6.87%	51.00%	11.80%
Remaining cumulative prepayments (1)	0.00%	25.62%	20.87%	0.00%	28.17%	23.83%

Average life (years)	0.07	1.33	1.02	0.18	1.37	1.01
Discount rate	8.66%	8.66%	8.66%	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).

June 30, 2024

December 31, 2023

Credit Card Receivables

Range (2)

Range

Remaining cumulative charge-offs (1)

N/A

20.16%

Principal payment rate (1)

N/A

7.06%

Average life (years)

N/A

1.00

Discount rate

N/A

10.20%

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

(2) As of June 30, 2024, the Company determined the fair value of the credit card receivables held for sale based on the terms outlined in the non-binding letter of intent.

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 June 30, 2024 and December 31, 2023, were $11.4 million and $9.3 million, respectively. The underlying cash flows as of June 30, 2024 and December 31, 2023, were $14.2 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):

June 30, 2024

December 31, 2023

Low

High

Weighted Average

Low