Oportun Financial Corporation

Good day and welcome to the Opportune Financial first quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Dorian Hare, SVP of Investor Relations. Please go ahead.

Thanks, and hello, everyone. Some of you are aware that I started in this role a few weeks ago, and I am very excited to be joining you today for my first earnings call while leading Opportunity Investor Relations efforts. With me to discuss opportunity first quarter, 2022 results are Raul Vasquez, chief executive officer and Jonathan Copeland, 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 positions, 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 question 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 at our earnings press release and in our filings with the Securities and Exchange Commission, Under the caption, risk factors, including our upcoming Form 10Q filing for the quarter ended March 31, 2022. 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 the period-to-period comparisons of our core business and which will provide useful information to investors regarding our financial condition and results of operations. 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 first quarter 2022 financial supplement, and the appendix section of the first quarter 2022 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. An archived version will be available after the call, along with a script of our prepared remarks. With that, I will now turn the call over to Raul.

Thanks, Dorian. Jonathan and I are glad to have you here, and I know you are keen to get to know our investment community. Good afternoon, everyone, and thank you for joining us. I'm incredibly proud of our record results for the first quarter. which reflected the power of our product offerings and exceeded all of our expectations. As you know, we have very ambitious goals for 2022, so we are pleased that the year is off to a great start. Let me start by sharing the headlines. We achieved record first quarter originations of $800 million, up 139% from the first quarter of 2021. Originations continued to be driven by our expansion into new states where we are taking share. New borrowers represented over 51% of our total loans, up from 40% a year ago. We delivered record revenue of $215 million and adjusted net income of $53 million for adjusted EPS of $1.58 and adjusted ROE of 34%. We are continuing to deliver strong credit performance as evidenced by our annualized net charge off rate of 8.6%, which was on par with the prior year quarter and with 17 basis points better than the midpoint of our expectations. Given the favorable trends in our business, we are raising our full year 2022 guidance. Now, let me tell you about our progress on our three strategic priorities for the year. that support our outlook for strong, profitable, and sustainable growth. Our first priority is to grow our members. We ended the first quarter with 1.7 million members, up from 1.5 million at the start of the year, a 48% annualized growth rate for the quarter. So we are very pleased with the pace of member growth. Our second strategic priority is to increase multi-product relationships with our members. As a proof point of our ability to do so, In the first quarter, products grew at an annualized rate of 58%, faster than our member growth of 48%. Additionally, at the end of the first quarter, 12% of our members with an Opportune credit card also had a personal loan with Opportune, which is up from 7% at the start of the year. We also began developing multi-product relationships across our credit and digital banking products during the first quarter, and are enthusiastic about expanding this aspect of our business as a growth lever. Our third strategic priority is enhancing our platform capabilities to meet the everyday financial needs of hardworking people. In our last earnings call, we talked about creating a seamless integrated acquisition funnel across all our products to increase member conversion and decrease the cost of member acquisition. In Q1, we made important progress toward that vision as we began offering Digit products to our applicants whom we were not yet able to approve for a loan, as well as to current and previous loan customers. I'm also happy to announce that the Digit integration into our credit card funnel went live a couple of weeks ago. While there is more work required this year to create a fully integrated funnel, we are beginning to gather valuable learnings from members we have started serving with multiple products. Now, let me share with you more detail regarding our progress across our different products. The growth of our unsecured personal loan product continues to benefit from our expansion across the nation. As of the end of the first quarter, our personal loans were available in 39 states, and we plan further geographic expansion this year. I want to emphasize how differentiated this geographic expansion is for us compared to other FinTechs that have already had nationwide operations. By introducing our superior customer value proposition in new geographies, we are taking share from other lenders who have never had to compete with OPPORTUNE. In addition, having access to new members allows us to grow selectively without having to expand the credit box. We are seeing strong growth in states such as Pennsylvania, North Carolina, Michigan, Virginia, and Ohio. Overall, we have added more than 22 million potential members in the 27 states we have entered with Medibank through the end of the first quarter. For our secured personal loan product, we ended the first quarter with $79 million in receivables, up 1,375% year-over-year, and on track to meet our year-end target of $140 million. In April, we also expanded our secured personal loan product to Arizona. Our secured personal loan growth continues to benefit from the fact that it is offered through the same acquisition funnel along with our unsecured personal loans, providing a proof point for the low member acquisition cost opportunity that a single unified acquisition funnel for all opportune products will offer in the future. We also saw excellent progress this quarter from our credit card product. Receivables grew 996% year-over-year to $90 million, also on track to meet our year-end goal of $150 million. We now have more than 153,000 members who have an OPPORTUNE branded credit card. We have also continued to make great progress with our lending as a service product. During the first quarter, we scaled our lending as a service network to include 284 partner locations, up from 28 a year ago, and we still expect to complete 2022 with over 500 partner locations. Additionally, our partnership with Sezzle, a buy now, pay later company, and our first digital lending as a service relationship remains on track to launch in the second half of the year. We are in discussions with multiple potential partners to expand our lending as a service channel, including both retail and fully digital businesses. Finally, our digit integration is progressing nicely. We are now offering digit products at multiple points in the OPPORTUNE application and servicing experiences, and we've enabled OPPORTUNE members to obtain our digit products at a discount. All of these activities are being conducted while, of course, honoring our members' privacy preferences. Finally, I'd like to tell you about how well Opportunity is positioned to both meet the needs of our hardworking members and create shareholder value in the current macro environment. Our members are benefiting from a strong job market, and in our 16 years of lending, we have found that a robust employment environment is the leading driver of both origination levels and the health of our loan portfolio. I've never been more confident about our ability to grow the company and create long-term shareholder value by providing inclusive, affordable financial services that empower our members to build a better future. 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 second quarter and full year. Jonathan?