Oportun Financial Corporation

Welcome to Opportunity Financials Corporation's fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent background noise. After the speaker's remarks, there will be a question and answer session. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Nils Erdmann, Vice President of Investor Relations. Mr. Erdmann, you may begin.

Thanks, and hello, everyone. Joining me today to discuss OPPORTUNE's fourth quarter 2021 results are Raul Vasquez, Chief Executive Officer, and Jonathan Koblitz, 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 upcoming Form 10-K filing for the year-ended December 31st, 2021. 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 is 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 2021, 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 fourth quarter 2021 financial supplement, and the appendix section of the fourth 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 archive version will be available after the call. With that, I will now turn the call over to Raul.

Good afternoon, everyone, and thank you for joining us. I'm incredibly proud of our results for the fourth quarter in 2021. We set out to return to growth, scale our new products, and enhance our digital platforms. We executed on all these priorities and delivered one of our strongest financial performances to date. At a high level, in 2021, we achieved record originations of $2.3 billion, up 70% from last year. The strength of our originations and demand for our credit products is carried over into 2022. This record originations level was driven by new borrowers. represented over 47% of our total loans, up from 35% a year ago. We believe this was due to our gaining market share as we expanded across the U.S., and this growth will drive our revenue expansion in 2022. We increased our full-year total revenue to a record $627 million and delivered adjusted net income of $79 million for adjusted EPS of $2.60. In addition, One of the most significant achievements of last year was our acquisition of Digit, which we completed in late December and believe is a truly transformative transaction. The acquisition unlocks significant value by enabling us to deepen relationships with our members, accelerates and diversifies our revenue growth, and aligns with our vision of being the leading AI-driven digital-first platform that helps hardworking individuals meet their borrowing, saving, banking, and investing needs. In terms of our strategic priorities, we also made significant progress last year that will drive growth in 2022. Our unsecured personal loan product is integral to our growth and success. We added 26 states to our footprint last year and are poised to grow in 2022 and beyond as we gain market share in these states where we've only just begun operating with MetaBank. For our secured personal loan product, we ended the fourth quarter with $58 million in receivables, up 97% sequentially, and well ahead of our year-end target of $50 million. A significant contributor to our success was the enhancement of our loan origination platform, which integrated secured and unsecured personal loans into a single acquisition funnel. We also saw excellent progress from our credit card product, Receivables nearly doubled sequentially and grew over 1,000% year-over-year to $67 million, well exceeding our year-end goal of $50 million. Our personal loan offering also expanded rapidly last year through our lending as a service partnerships. We scaled our network to include 208 Dolex locations and 50 Bari Financial Group stores. And in 2022, we expect to more than double this number to over 500 lending-as-a-service locations. Moreover, we plan to extend our lending-as-a-service channel to additional partners, including both retail and fully digital businesses. In mid-January of this year, we announced the first of these, an all-digital lending-as-a-service partnership with Sezzle. This new partnership with a leading buy-now, pay-later solution provides enhanced flexibility for consumers and enables Sezzle's online merchants to offer additional affordable payment plans like ours to shoppers. When deployed, OPPORTUNE's responsible lending product will be available for larger purchases as a checkout option through Sezzle, which we believe will allow us to reach more new members. We will have more to share about this exciting partnership as we get closer to launch. Heading into 2022, I am thrilled by the momentum of our business. Our three strategic priorities for 2022 that support our outlook for strong, profitable, and sustainable growth are as follows. Number one, grow our members. Two, increase multi-product relationships. And three, enhance our platform capabilities. I will now cover each of these priorities in more detail. First, let me tell you how we plan to grow our members. The growth we delivered with our three credit products in 2021 gives us confidence that we can accelerate our growth with the addition of Digit's four digital banking products, Digit Savings, Digit Direct, Digit Investing, and Digit Retirement. With this expanded suite of seven products, we now offer borrowing, saving, banking, and investing products through our platform and gain opportunities to establish long-term and more durable relationships with our customers. This is why Digit refers to its customers as members, and going forward, every opportune borrower and opportune credit card holder will also now become a member of our growing community. In 2022, we aim to expand our members through investment in various digital and direct member acquisition channels. As of the end of Q4, we have approximately 1.5 million members. Our goal is to grow this space across our direct-to-consumer channels, as well as through our expanding network of lending as a service partners. Now, I'll talk about how we plan to increase our multi-product relationships with our members. The combination of our profitable lending economics with Digit's business creates two compelling dynamics, enabling cross-buying of our seven products and the ability to offer product configurations at more attractive price points. Our ability to enable cross buying is evidenced by the fact that as of the end of last year, over 7% of our credit card holders also had a personal loan with us, and in January, this had increased to 9%. We intend to build on this success this year by developing a unified experience that increases the number of products available to members and prospects. Our ability to address multiple financial needs for our members will lead to increased lifetime value as they take advantage of our seven diverse product offerings. Third and finally, we are enhancing platform capabilities across our business. We will accelerate our member growth by building a seamless integrated acquisition funnel across all our products. This will increase member conversion and decrease cost of member acquisition by affording the broadest possible opportunity to begin relationships with members. For example, if an applicant comes to us and we aren't initially able to approve them for a loan or credit card, we can still establish a relationship with one of our digital banking products. This is a significant opportunity considering that last year, millions of people applied for our credit products and we had close to 10 million visitors to our website. We believe enhanced platform capabilities will generate higher levels of engagement, increased multi-product adoption, and greater member lifetime value. In closing, our business has never been as strong and as well positioned for growth as it is today, and I have great confidence in our ability to execute on these priorities. 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 first quarter and full year. Jonathan?