Oportun Financial Corporation

Greetings. Welcome to the Opportune Financial Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mills Erdman. Thank you. You may begin.

Thanks, and good afternoon, everyone. Joining me today to discuss OPPORTUNE's third quarter 2021 results are Raul Vasquez, Chief Executive Officer, and Jonathan Koblentz, Chief Financial Officer and Chief Administrative Officer. I'll remind everyone on the call or webcast that some of the remarks made today will include forward-looking statements related to our business, future results of operations and financial position, planned products and services, business strategy, and plans and objectives of management for our future operations. Actual results may differ materially from those contemplated or implied by these forward-looking statements, and we caution you not to place undue reliance on these forward-looking statements. A more detailed discussion of the risk factors that could cause these results to differ materially are set forth in our earnings press release and in our filings with the Securities and Exchange Commission under the caption Risk Factors, including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2020. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events other than as required by law. Also on today's call, we will present both GAAP and non-GAAP financial measures, which we believe can be useful measures for period-to-period comparisons of our core business and which will provide useful information to investors regarding our financial condition and results of operation. Unless stated otherwise, all of the metrics shared on this call will be on a fair value pro forma basis. Also, since the start of this year, there is no difference between our GAAP-reported metrics and fair value pro forma. A full list of definitions and reconciliations can be found in our earnings materials available at the investor relations section on our website. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. A reconciliation of non-GAAP to GAAP measures is included in our earnings press release, our third quarter 2021 financial supplement, and the appendix section of the third quarter 2021 earnings presentation. all of which are available at the investor relations section of our website at investor.opportune.com. In addition, this call is being webcast and an archived version will be available after the call. With that, I will now turn the call over to Raoul.

Good afternoon, everyone, and thank you for joining us. I'm happy to share that Q3 was another great quarter for Opportune. We delivered strong year-over-year growth for all of our products, a historically low net charge-off rate, continued disciplined expense management and growing profitability. In the quarter, we generated $159 million of total revenue and $24 million of adjusted net income or 78 cents of adjusted EPS. Our aggregate originations were $662 million up 119% year over year and well ahead of our expectation of 600 million. This was our second consecutive quarter of triple-digit year-over-year originations growth. Demand for our products now exceeds the level of growth that we were experiencing pre-pandemic. While we continue to lean into growth, we are also delivering the best credit performance in our 15-year history. Our annualized net charge-off rate for Q3 was 5.5%, an improvement of 100 basis points relative to last quarter, and 498 basis points better than last year. Delinquency rates also performed incredibly well with those 30 plus day delinquencies at 2.8% at quarter end. I'd now like to turn to the strategic objectives that I laid out at the beginning of the year and which also serve as some of our key performance measures. First, we continue to build on the success of our digital first strategy. Second, we are scaling our new product lines and investing in our multi-product offering. Third, We have accelerated our expansion across the nation through our bank partnership with MetaBank. And fourth, we are advancing our lending as a service partnerships initiative. I'll touch on each of these in turn, starting with the continued progress of our digital first initiatives. Our customers' utilization of our online services accelerated yet again in Q3, with 83% of new applicants choosing to apply online, up from 63% one year ago. This digital first progress has also supported our objective to grow and broaden our customer base. In Q3, our active customers grew 24% year-over-year to 772,361, and the percentage of new applicants choosing servicing in English reached 82% as compared to 60% in Q3 2020. Turning to our new products initiative for our secured personal loan product, we ended the third quarter with $29.6 million in receivables, up 113% sequentially, and substantially above last year's level of $0.3 million. We rolled out our offering to customers in Texas, our second largest market, in late September, and it was gratifying to see the product gain immediate traction and to see momentum accelerate throughout the month of October. As of the end of Q3, our SPL portfolio was tracking well ahead of our target, and I'm pleased to share that we are increasing our year-end receivables goal from $40 million to $50 million. We also saw excellent progress from our credit card product. Credit card receivables nearly doubled sequentially and grew 1,094% year over year to $38.2 million and are tracking very well to meet our year-end goal of $50 million. As of the end of October, we have over 94,705 active customer accounts in 45 states across the U.S. Third, through our MetaBank partnership, we have now expanded our unsecured personal loan product offering to 23 new states, bringing our footprint to 35 states. The results of this rollout have exceeded our expectations, and in the past month, we have effectively increased our addressable market by over 75%. Our partnership with MetaBank enables us to reach 50 million more hardworking people in the coming years, and we plan to continue our state expansion in the months to come. Finally, let me turn to our lending as a service partnerships. Our platform is scaled rapidly with Dolex and expanded to 208 locations at the end of October, having exceeded our updated year-end objective of over 200 locations. We also recently announced the launch of our lending as a service offering in 21 locations with Bari Financial Group, our second lending as a service partner. We expect our loans to gradually be made available in over 200 Bari store locations across Texas and over time to extend to Bari's locations in other states. In addition, we continue to explore additional relationships across multiple verticals and expect to announce further new partnerships in the months to come. In closing, The strength of our AI-driven digital platform is enabling us to lean into growth and take market share. As demonstrated by our progress and results this quarter, we are also successfully delivering on our strategy to extend our multi-product offerings across the U.S., becoming a national brand for inclusive, affordable financial products. I'll now turn the call over to Jonathan, who will walk you through a more in-depth discussion of our financial results and provide our outlook for the fourth quarter and four years. We will then open the line for your questions. Jonathan?