Oportun Financial Corporation

welcome to the Opportunity Financial First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-only mode, and following the presentation, there will be a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 8th, 2025. I would now like to turn the conference call over to Mr. Dorian Hare. Please go ahead.

Thanks, and hello, everyone. With me to discuss Opportunity's first quarter 2025 results are Raul Vasquez, Chief Executive Officer, and Paul Appleton, our Treasurer, Head of Capital Markets, and Interim Chief Financial 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, including projected adjusted ROE attainment and expected origination growth, planned products and services, business strategy, expense savings measures, 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 upcoming Form 10Q filing for the quarter ended March 31, 2025. 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 comparison 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 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 financial measures is included in our earnings press release, our first quarter 2025 financial supplement, and the appendix section of the first quarter 2025 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, along with a copy of our prepared remarks. With that, I will now turn the call over to Raul.

Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. I'd also like to welcome Paul to the call for the first time. We started 2025 with a strong first quarter, building on our momentum from last year. We've now met or exceeded guidance for six consecutive quarters while consistently driving financial and operational improvements across the business. The four key headlines from Q1 are continuing gap profitability, improving credit performance, responsible originations growth, and ongoing expense disciplines. First, we were gap profitable again in Q1, continuing the momentum we regained in Q4. Our Q1 net income of $9.8 million was a $36 million improvement year over year and drove an ROE of 11%. Adjusted net income of $19 million represented a $15 million year over year increase. Moreover, we generated $34 million of adjusted EBITDA, a $32 million increase. We achieved these results primarily through a combination of originations growth, ongoing expense discipline, and improved credit performance. I want to reiterate that we expect to be profitable on a GAAP basis for full year 2025. Regarding improved credit performance, Our annualized net charge-off rate was 12.2%, which was at the low end of our guidance range. Importantly, our underlying trends remain positive with dollar net charge-offs down year-over-year for the sixth consecutive quarter. Our 30-plus day delinquency rate was 4.7%, marking the fifth consecutive year-over-year decline, in this instance, by 56 basis points. I'm pleased to inform you that following the first quarter, our 30-day plus day delinquency rate declined further to 4.5% at the end of April. The guidance Paul will share reflects lower net charge-off rates in the quarters ahead. Third, originations were $469 million during Q1, up 39% year-over-year. It's important to note that this growth reflects the unusually low baseline from 1Q24. Secured personal loans accounted for 19% of our 1Q25 personal loan growth. This is constructive to credit quality because losses on secured personal loans were approximately 500 basis points lower than unsecured personal loans last year. Furthermore, $32 million or 7% of Q1 originations were sold to partners. For Q2, we expect year-over-year growth in the 10% range, supported by continued outperformance in secured personal loans. Sequentially, we still expect originations to rise from Q1's $469 million to a higher level in Q4, aligning with our typical seasonal pattern. However, given current macroeconomic uncertainty, we're prudently moderating our full-year 2025 originations growth outlook to approximately 10%, down from our prior 10% to 15% range while maintaining tight credit standards. And lastly, we reported $93 million in operating expenses, down 15% year-over-year. We reduced total expenses while increasing our marketing expenditure by $4 million, or 24%, which drove our originations growth. We continue to expect 2025 gap operating expenses of approximately $390 million or $97.5 million per quarter on average. Now let me update you on our progress across our three strategic priorities, improving credit outcomes, strengthening business economics, and identifying high-quality originations. Regarding improving credit outcomes, we continue to adjust our models based upon member behavior and the trends observed in the communities we serve. We're making further adjustments to better align risk levels by loan amount based upon recent vintage performance and to enhance our V12 credit model with additional data on new members. On strengthening business economics, I'm pleased that our Q1 adjusted ROE was 21%. We are confident in our progress towards consistently attaining full-year gap ROEs in the 20% to 28% range over the long term. And we're continuing to identify high-quality originations by reinvesting in marketing, targeting new members with higher levels of free cash flow, and supporting our best existing members, all within our conservative credit standards. We also remain focused on expanding our secured personal loans portfolio, which we grew by 59% year over year to $178 million for the 7% of our own portfolio in the first quarter. Finally, I'd like to preview our revised 2025 guidance. While we acknowledge the uncertainty in today's economic environment, it's worth noting that OPPORTUNE, founded in 2005, has weathered multiple macro shocks, beginning with a global financial crisis and consistently emerged stronger. We continue to monitor key indicators such as inflation, unemployment, fuel prices, and evolving government policies alongside our internal performance metrics. Supported by our more efficient cost structure and improved credit performance, this positions us to remain agile and well-prepared as conditions evolve. Despite the uncertain environment, our guidance reflects our commitment to continue to drive performance improvement. Paul will share with you that factoring both our Q1 performance and the tapering of our originations growth expectations to 10%, we're reiterating our full year 2025 adjusted EPS expectations. Our adjusted EPS guidance range of $1.10 to $1.30 continues to reflect strong growth of 53 to 81% over 2024 suggested EPS of 72 cents. In summary, we turned the corner in 2024 and continued to make progress in Q1. We are focused on executing our three strategic priorities and ensuring that momentum continues. With that, I will turn it over to Paul for additional details on our financial and credit performance, as well as our guidance.

Thanks, Rahul, and good afternoon, everyone. As you can see on slide five, we had a strong first quarter, exceeding the high end of our total revenue and adjusted EBITDA guidance, while coming in at the favorable end of our annualized net charge-off rate guidance. As shown on slide six, we delivered total revenue of $236 million in the first quarter. We were gap profitable for the second consecutive quarter with $9.8 million of net income, and diluted EPS of 21 cents. We were also profitable on an adjusted basis for the fifth consecutive quarter, with adjusted net income of $18.6 million and an adjusted EPS of 40 cents. While maintaining credit discipline, originations of $469 million were up 39% year-over-year, which, as Raoul mentioned, reflected an unusually low baseline in Q4-24. Sequentially, originations were down 10% from Q4's $522 million, consistent with the typical seasonality we've observed in prior years. Total revenue of $236 million declined by $15 million, or 6% year over year. This decline was primarily due to the absence of $11 million of credit card revenue in the prior year quarter. As a reminder, we completed the sale of our credit card portfolio in November of last year, which was accretive to our bottom line. Our total net decrease in fair value of $73 million was primarily driven by current period net charge-offs of $81 million. Furthermore, higher yielding assets drove a favorable $12 million mark-to-market adjustment on our loan portfolio. First quarter interest expense of $57 million was up $3 million year-over-year, as sub-3% pandemic-era ABS issuances continued to pay down. Net revenue was $106 million, up 34% year-over-year, as lower fair value marks and lower net charge-offs more than offset lower total revenue and higher interest expense. As a reminder, we elected to stop accounting for new debt financing using the fair value method in 2023. And as a result, we expect a fair value impact on our asset-backed notes to be minimal after this year as prior financings approach maturity. Operating expenses of $93 million, down 15% from the prior year, reflecting our ongoing cost discipline. As Raul mentioned, we continue to expect full-year 2025 operating expenses of approximately $390 million, averaging $97.5 million a quarter for a 5% reduction from 2024. Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes, was $34 million in the first quarter. This reflected a significant year-over-year increase of $32 million driven by cost reductions and credit performance improvement. As a result, our adjusted EBITDA margin increased year-over-year by 13.4 percentage points from 0.8% to 14.2%. Adjusted net income increased to $19 million, an improvement of $15 million from last year, principally driven by our reduced operating expenses along with improved credit performance. Adjusted EPS increased year over year from $0.09 to $0.40. Next, I'd like to provide some additional color on our strong Q1 credit performance. Our front book of loans originated since July 2022 continues to perform quite well, while our back book of pre-July 2022 loans continues to roll off. As you can see on slide 7, our more recent credit vintages have generally outperformed their predecessors, and as a result, the losses on our front book 12 months after disbursement are now generally running approximately 600 basis points lower than our back book. Furthermore, you can see our annualized net charge-off rate for the quarter by front book versus back book on slide 8. In Q1, the front book had an annualized net charge-off rate of 11.5%, near the 9% to 11% net charge-off range that we target in our unit economics model. The back book continues to decline, representing just 4% of the loan portfolio at quarter end, but accounting for 14% of gross charge-offs. We expect the back book to further diminish to 1% of our portfolio by the end of 2025. Finally, as you can see on slide nine, our net charge off rate was 12.2% in the first quarter, which was at the low end of guidance. Our Q1 net charge off dollar declined by 5% while we reduced our 30 plus day delinquency rate by 56 basis points, which bodes well for future credit performance. So in summary, we continue to feel good about the quality of the credit we are originating. Regarding our capital and liquidity, as shown on slide 11, we deleveraged by reducing our debt to equity ratio from 7.9 times to 7.6 times quarter over quarter, supported by gap profitability and $101 million in operating cash flow, of which $29 million was used to pay down debt. We've now reduced leveraged meaningfully from 3Q24's peak level of 8.7 times. In late April and following the close of the first quarter, we fully satisfied the $12.5 million in mandatory payments due by July 31st on our corporate debt facility, completing the payments three months ahead of schedule. Consequently, Opportune has no further mandatory corporate debt repayment obligations during the remainder of 2025. As of March 31st, total cash was $231 million, of which $79 million was unrestricted and $152 million was restricted. Further bolstering our liquidity was $317 million in available funding capacity under our warehouse lines. Our continued access to the capital markets is well established. Since June 2023, Opportune has raised approximately $3 billion in diversified financings including whole loan sales, securitizations, and warehouse facilities from fixed income investors and banks. The company maintains an exemplary record in the ABS market, having completed 24 transactions and issued $6.3 billion in notes to date from the opportune shelf. As a reminder, in January, we issued $425 million in ABS notes, which freed up warehouse capacity for future originations. The transaction was a significant success, oversubscribed by more than seven times and pricing at a 6.95% weighted average yield, 127 basis points lower than our previous transaction in August 2024. We also closed on a two-year $187.5 million committed warehouse facility in April. This transaction increased our total committed warehouse capacity to $954 million with a diversified group of lenders, and our available funding capacity at the end of April was $417 million. Turning now to our guidance as shown on slide 12, our outlook for the second quarter is total revenue of $237 to $242 million, annualized net charge-off rate of 11.9% plus or minus 15 basis points, and adjusted EBITDA of $29 to $34 million. Our Q2 total revenue guidance reflects a 4% year-over-year decline at the midpoint, which is almost entirely due to the absence of the prior year's credit card revenue. Our Q2 adjusted EBITDA guidance of $32 million at the midpoint reflects disciplined expense management and growth over 2Q24's level of $30 million. We expect our Q2 annualized net charge-off rate to be 11.9% at the midpoint of guidance, down approximately 40 basis points year-over-year. We are reiterating all aspects of our full-year 2025 guidance, including total revenue of $945 to $970 million, annualized net charge-off rate of 11.5% plus or minus 50 basis points, adjusted EBITDA of $135 to $145 million, adjusted net income of $53 to $63 million, and adjusted EPS of $1.10 to $1.30. Our full-year guidance reflects our first quarter performance, the uncertain macroeconomic environment, and a slight tapering of our full-year originations growth expectation from our prior 10 to 15% range to around 10%. Before I turn it back to Rahul, I'd like to update you on our progress towards our long-term unit economics targets. While our long-term targets are gap targets, I'll be using adjusted metrics for comparison because they remove non-recurring items and provide a better sense of our future run rate. It's clear on slide 14 that we continue to make significant progress in Q1. Adjusted ROE was 21%, which was a 17 percentage point year over year improvement. The increase was driven principally by cost reductions, improved credit performance, and a higher loan yield. Our North Star continues to be delivering gap ROEs of 20% to 28% annually, driven by reduced annualized net charge-offs to 9% to 11%, lowering operating expenses to 12.5% of our owned portfolio, and attaining annual growth of 10% to 15% in our owned loan portfolio. We also intend to return to our six to one debt to equity leverage ratio over the longer term by reducing our corporate debt outstanding and continuing to increase our GAAP profitability. Rahul, back over to you.

Thanks, Paul. To close, I'd like to emphasize three key points. First, we're pleased to have carried 2024's momentum into 2025 by being GAAP profitable for the second consecutive quarter with a gap ROE of 11% and an adjusted ROE of 21%. Second, we are closely monitoring the macroeconomic environment, have factored it into our outlook, and are adjusting our underwriting and expenses as needed. And finally, we're reiterating our full-year 2025 guidance expectations for revenue, adjusted earnings, and adjusted EBITDA. Our adjusted EPS guidance range from $1.10 to $1.30 reflects strong growth of 53% to 81%, and we continue to expect to be gap profitable on a four-year basis. Our strategic focus on improving credit performance, strengthening business economics, and prioritizing high-quality originations is delivering consistent improvements in our performance. I'm deeply grateful to our employees and shareholders for their unwavering commitment as we continue advancing on this journey. With that, Operator, let's open up the line for questions.

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging that you do have a question. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from John Jeffries. Please go ahead.

Hey, guys. How are you? It's John Hecht. My name is not John Jeffries, but I work at Jeffries. Anyway, congratulations on a lot of the progress here. I guess, Raul, maybe can you give us an update on, you know, online or digital loan application activity versus in branch? And are you seeing any changes there, you know, in terms of mix and behavior, you know, on the front end of the loan originations?

Hi, John. Thank you for, let me start with thank you for the congratulations. We felt really good about the way that the team executed in Q1. You're going to see when we print our investor deck, we give a quick update on originations. You're going to see pretty stable. There's been a small shift, I think, on the order of two points from physical to online, quarter over quarter. As you know, we manage the business at a portfolio level. We develop the channels so that they all work together. So we're not seeing any big changes, just very, very modest changes.

Okay. And then, you know, I know you're targeting a higher, you're growing the secured business relative to the overall book. You know, is that a, is there a way to kind of execute that, you know, that involves kind of trying to steer customers to that product or is it finding all new customers or how does that, you know, I guess maybe give us the update on that strategic objective.

Sure. So I'm really pleased with the performance of secure personal loans in Q1. The book grew about 59% year over year. So we were able to add about $66 million to the principal balance of that book. Average loan size came down, right? We think that this environment, it makes sense for us to continue to be very discerning and very thoughtful. So average loan size came down about $2,200 year over year for secure personal loans. So I like the growth. I like the fact that the growth was driven by units, not by loan size. And from a strategy perspective, it's both the things that you talked about. So from a user experience perspective, we continue to focus on presenting both products to our members and giving them the option of picking whichever product is going to meet their needs. And at the same time, our marketing group is certainly trying to figure out how do we create some specific strategies to try to bring in more people that are going to be interested in that product. It's now about 7% of our book, and our goal this year is to continue to drive growth faster in that part of the business and to continue to increase the penetration of that as a percentage of our book.

Okay. That makes sense. And then the last question is maybe any comments on competition, just given the uncertainty in the macro backdrop and what opportunities or challenges that presents for you guys?

We've always felt that we compete very well with others. When you look at the all-in cost for our product, it is very favorable to some of the alternatives that are out there. Thankfully, we think that The competitors continue to behave in a very rational way, right? I think pricing still reflects elevated cost of funds across the board. So we think that the competitive environment right now continues to be very constructive for us, and that's part of what's allowing us to perform in this manner.

Great. I appreciate that, guys. Thank you.

Thank you, John.

Thank you. And your next question comes from Chris Saki from Singular Research. Please go ahead.

Yes, I'm in for Gauchi. Just let's see, how much is in-app features such as payment reminders and dynamic pricing reduce customer acquisition costs for secured loans versus unsecured? Is this replicable in newer markets?

Yeah, it's a great question. So when we look at our cost to acquire, we look at it across the entire business. I'm really pleased with the fact that our cost to acquire was very stable on a year over year basis. So it was $139 this quarter, $138 a year ago in Q1. In terms of whether it's the app, whether it is direct mail, our referral program was also something that grew a lot. We have 352% year over year growth in referrals. We really try to take a holistic approach to how we make people aware, number one, that Opportune exists and that we're a great value relative to other options. And then to your point, Chris, we also try to make them aware, as John was just asking about as well, we try to make them aware of the fact that we have both an unsecured product and then a secured product. The secured product gives us an opportunity to make loans that are about twice as large. We love the product also because it has losses that last year ran $500,000 basis points lower than the loss rate for unsecured loans. So we're really focused across all touch points, Chris. We're focused on driving awareness of secured personal loans.

Okay, great. Have you noticed any unexpected shifts in repayment patterns or customer engagement since phasing out physical checks? And how does this trend influence your fraud prevention strategies?

So no, I wouldn't say we've noticed anything unexpected. When we think about both delinquencies and losses, you can see where we expect it to be from a guidance perspective. So the fact that delinquencies, for example, came in at 4.7%, down 56 basis points year over year for the quarter. We gave a sense of where April came in. April delinquencies were even lower, so we like that downward trend. So when we think about both payment behavior and the potential for fraud, there's nothing alarming and nothing unexpected. We're performing in line with guidance, and obviously this is an area that our team is very, very focused on.

Okay, great. And then last from me. So returning borrowers drove originations, it looks like. Is this shift intentional to improve unit economics? And if so, what's the long-term feeling for new customer acquisition?

From an acquisition perspective, the things that we've been focused on have been, number one, to your point, are returning borrowers we know are among our best borrowers. They generally get access to more capital. They have a lower cost to acquire. The loss levels are lower. So we're very pleased with growth on the returning side of the business. From a cost to acquire perspective, I wouldn't say that it's going to drive any shift there. We want to continue to acquire high quality new borrowers. We've mentioned in the past that we look in this environment in particular, we look for new borrowers that are going to do better in the different scores that we use from an underwriting perspective. I think as you know, we use a few proprietary scores. We're looking for new borrowers that have higher levels of free cash flow. We think that that helps position them well for any unexpected macroeconomic environment that may develop. So the new borrowers with those characteristics we know become attractive returning borrowers in the future. So we're going to continue to look for both high-quality new borrowers and then focus on our great returning borrowers.

Okay, thanks for those answers. Thank you, Chris.

Thank you. And your next question comes from Brendan McCarthy from Sudati. Please go ahead.

Good afternoon. Thanks for taking my questions here. I just want to start off on the macro outlook. You mentioned you're tapering the outlook for originations for this year down to 10% at the lower level of that original 10% to 15% outlook. But I guess what are you just curious as to what you're seeing in the macroeconomic picture to drive this decision? Or is it more just of a cautious approach for the rest of the year?

It's the latter. I mean, I think Chair Powell, right, stated it very well yesterday that there is uncertainty in the macro, right? It's not clear what level of tariffs are going to exist over what time period. And I think as he stated yesterday, there is the potential for a higher unemployment and for higher inflation. We're not seeing it yet, right? We think the job market for a blue collar worker that earns $50,000, that's our core customer. We think the job market is really, really strong for our customer. But we think it makes sense right now to take a bit of a wait and see perspective from a macro perspective. Wait a little bit. Hopefully there will be more deals like the ones announced this morning by the administration. And if that happens, right, and the macro gets clearer that it's going to be a strong environment, then we'll just move back up within the range of the 10 to 15%. But right now, Brendan, we just think it's prudent to be on the lower end of that range and just to wait and see.

Understood. Thanks for that, Raul. And pivoting to the operating expense outlook, it looks like for the first quarter, the number of $93 million came in well below the outlook for the average of right around $98 million. I guess what factors could cause meaningful underperformance there or higher operating expenses there for the year end, or what factors could cause that number to stay fairly low on a quarterly basis going forward?

Well, we're clearly focused on continuing to be disciplined from an OpEx perspective, Brendan. I liked your question because one of the things we've done, again, within this kind of framework of really thinking about what's the prudent level of growth today and then being able to watch the environment and see how it develops. Within that framework, we decided that we were going to push some of the marketing dollars into the back half of the year. So that that way, if there's more clarity on the macro environment, if inflation continues to stay low, the job market is as strong as it is today, then we've got some dry powder from a marketing perspective to drive growth at the back half of the year and position us for a great 2026. If the macro remains uncertain, right, then we won't spend those dollars, and we'll have a lower OPEX than the 390 we're projecting today.

Understood. Thanks, Raul. I appreciate the color. One last question from me. I saw the announcement yesterday on the board evolution of Opportune, and just curious if you could provide additional color, I guess, on the decision to ultimately shrink the size of the board and, you know, how investors can really think about that.

Sure. So the board determined that a smaller board size would be both more conventional and more efficient. The board also felt that this reflects feedback that we've heard from shareholders, and it really underscores our commitment to thoughtful board evolution. The board regularly reviews its composition, ensures that it's got the right mix of skills and expertise to effectively oversee the business. So I'd say those were the drivers, Brendan.

Thanks, Earl. Appreciate the insight. That's all for me.

Thank you.

Thank you. And the next question comes from Hal Gochich from Beads Rally Security. Please go ahead.

Hey, guys. Good continued performance here. You know, can you just go over some of the data you gave on the whole loan sales again? I mean, you grew originations quite nicely above your target. Can you just go over the whole loan sales and maybe how that impacted the quarter?

Sure, Hal. So first, thank you. We feel really good about the quarter. So within the $469 million of originations that we had, there are a couple of ways to think about that. Number one, secure personal loans drove about 19% of that Q1 growth, right? So for all the reasons that we've talked about already, that's a big strategic priority. We think of those as very high-quality originations, given the fact that it's twice the revenue. losses that are 500 basis points lower. To your point, when we're able to grow at these levels, one of the things that we also want to do is be able to sell loans to partners. So we had about $32 million of loans that were sold to our partners, right? Those are people that like the cash flows. We think of it as a signal that these are high-quality assets that partners want to own. So those are two of the ways to think about kind of the growth that took place in Q1.

Okay. Okay, thank you. Thank you, Hal.

Thank you. And just as a reminder, if you do have a question, please press star 1. And your next question comes from Rick Shane from JPMorgan. Please go ahead.

Hey, Raul. Hope you're well. I actually am sitting here and wondering if Jonathan is ignoring this call or is off listening and having a beer, but either way, I think we all wish him well. I did want to have one question, and I apologize if this was covered. We've had multiple calls this afternoon. You guys had talked last quarter about incorporating risk associated with inflation into your underwriting models. Can you talk a little bit about how you do that? It feels to me like given where we are, that's probably the most important consideration. Who knows what's going to happen, but it is the wild card.

Yeah, I really appreciate that question, Rick. So I'd say at a high level, There are two ways to think about this. So just for context for others that may not be quite as aware, one of the things that we do with our underwriting engine is as much as happens with our phones, there are major upgrades and then minor upgrades. So the major ones we think of as going from V9 to V10 to V11, and what you're referring to, Rick, is V12, which we introduced for the first time last year. So V12, one of the benefits of V12 is it was trained using data from this inflationary period that we've had recently. So the underwriting model, V12, is much more equipped to think about who are going to be the borrowers that we want to approve within this environment that still has the compounding effects of inflation that have taken place over the last few years. So V12 was built in that way and one of the things that's already planned is in the coming weeks we're actually going to do one of the minor updates in V12. So we're going to look at the performance over the last year and we're going to go ahead and make some tweaks to V12 and then introduce that as part of our new underwriting approach. So that's one of the things that's going to help us in this uncertain environment. The other thing that we've talked about in the past is one of the things that we were able to do was to look for some signals of individuals who are applying today who are likely to take on additional debt either at the same time or after taking on debt from Opportune. This has been one of the challenges in our industry in the past. It's been loan stacking, in particular when the economic times get a bit more challenging. So I think that that's another set of signals and data that our data scientists and engineers have been able to build into our underwriting approach. And both of those things are going to help us in this environment.

Got it. And, you know, look, you guys had made the comment about sort of shifting to the lower end of your origination guidance. Is that a function of increasing the importance of the inflationary factor in your model and Can you really dial things up and down like that within the model on a real-time basis? Say, hey, here are the 17 factors. Inflation is assigned to 4%. We're more worried about it now, so we're going to weight that 7%.

I mean, there are a lot of factors that we take into consideration. So the short answer is yes, we can dial it up and down. That's the short answer. But we're not just looking at inflation. For example, the team also looks at trends at a state level, at a metro level, even within states, at an industry level. And then we do take into consideration, to your point, Rick, we take into consideration things like inflation, fuel prices, unemployment, again, at a national and a state level. So all those things are taken into account when we decide what adjustments we want to make to the credit box. As a reminder, throughout the year when we have targeted this 10% to 15% growth, it wasn't going to be by opening up the credit box. It was going to be by funding more marketing investments, right, to flow through the currently conservative credit parameters. So one of the things that we've done, as I mentioned earlier, is just dial back on the marketing and push that into the back half of the year. to be at the lower end of our 10 to 15% range.

Got it. Okay. And that was a comment I missed. I appreciate the feedback and the answers. It's a fun part of this job. It really is interesting and appreciate the insight. Thank you. Thank you, Rick.

Thank you. And there are no further questions at this time. Mr. Vasquez, you may continue your conference.

I want to thank everyone once again for joining us on today's call and we look forward to speaking with you again soon. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for your participation and we ask that you please disconnect. Have a great day.