Oportun Financial Corporation (Nasdaq: OPRT) (“Oportun”, or the
"Company") today announced a plan to streamline its operations,
intended to assure that the Company’s resources are efficiently
allocated in the current macroeconomic environment.
“We are taking a series of cost reduction
measures that include the very difficult decision to reduce the
size of our corporate staff by approximately 10%,” said Raul
Vazquez, CEO of Oportun. “These actions are aimed at positioning
Oportun to perform efficiently, while maintaining our high
standards for serving our members. I remain confident that we will
emerge from this challenging economic environment a stronger
company than ever before, just as Oportun did following the
pandemic and the financial crisis."
The Company also announced preliminary financial
results for the fourth quarter ending December 31, 2022. Oportun
will release completed financial results for the fourth quarter on
its upcoming earnings call.
Streamlining Operations
Oportun is taking a series of measures to
streamline its operations, including reducing the size of its
corporate staff by 10%, impacting approximately 155 employees, and
reducing its expenditures on external contractors. In relation to
these and other personnel related activities, management expects to
incur non-recurring, pre-tax charges of $5 million to $6 million in
the first quarter of 2023. Oportun expects to exclude these charges
from its calculation of its non-GAAP financial measures. These
reductions are anticipated to result in annualized run-rate savings
in compensation and benefits of approximately $38 million beginning
in 2023.
Oportun has furthermore identified certain
non-personnel related operational efficiencies that are anticipated
to result in annualized run-rate savings of $10 to $15 million
beginning in 2023.
Preliminary Financial Results for the
Fourth Quarter of 2022
For the fourth quarter of 2022, Aggregate
Originations totaled $610 million. The fourth quarter Annualized
Net Charge-Off Rate was 12.8%. Management continues to expect that
the Annualized Net Charge-Off Rate will start decreasing in the
first quarter of 2023 and return to Oportun's target 7% to 9% range
by the third quarter of 2023.
Management currently expects fourth quarter
Total Revenue to be approximately $262 million, and Adjusted Net
Income to be within the range of $3 million to $5 million.
About Oportun
Oportun (Nasdaq: OPRT) is an A.I.-powered
digital banking platform that seeks to make financial health
effortless for anyone. Driven by a mission to provide inclusive and
affordable financial services, Oportun helps its over 1.8 million
hardworking members meet their daily borrowing, savings, banking,
and investing needs. Since inception, Oportun has provided more
than $14 billion in responsible and affordable credit, saved its
members more than $2.3 billion in interest and fees, and
automatically helped members set aside more than $8.5 billion for
rainy days and other needs. In recognition of its responsibly
designed products, Oportun has been certified as a Community
Development Financial Institution (CDFI) since 2009. For more
information about Oportun, visit https://oportun.com.
Forward-Looking Statements
These preliminary financial and operating
results presented herein are an estimate and subject to the
completion of the Company’s financial closing and other procedures
and finalization of the Company’s consolidated financial statements
for its year ended December 31, 2022, including the completion of
the audit of the Company’s financial statements. Accordingly,
actual financial and operating results that will be reflected in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2022, including its audited financial statements, when
they are completed and publicly disclosed may differ from these
preliminary results. In addition, any statements regarding the
Company's estimated financial performance for the fourth quarter
2022 do not present all information necessary for an understanding
of the Company's financial condition and results of operations as
of and for the quarterly period ended December 31, 2022.
This press release contains forward-looking
statements including, but not limited to, statements related to the
effectiveness of Oportun’s cost-cutting measures in strengthening
its business; the anticipated size and timing of charges taken and
annualized run-rate savings in compensation and benefits for
Oportun in connection with its reduction in its corporate staff and
spending on external contractors; the anticipated size, timing and
effectiveness of non-personnel related operational efficiencies;
Oportun’s preliminary unaudited financial results for the fourth
quarter of 2022, including fourth quarter aggregate originations,
fourth quarter annualized net charge-off rate, Oportun’s annualized
net charge-off rate range for the second half of 2023 and
management’s expectations for fourth quarter revenue and adjusted
net income, among other items. The charges the Company expects to
incur are subject to assumptions, and actual charges may differ
from the estimates disclosed above. In addition, the Company may
incur other charges or cash expenditures not currently contemplated
due to unanticipated events that may occur. These statements
involve known and unknown risks, uncertainties, assumptions and
other factors that may cause Oportun’s actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. These forward-looking statements are
subject to the safe harbor provisions under the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of
1934, as amended. Oportun has based these forward-looking
statements largely on its current expectations and projections
about future events and financial trends that it believes may
affect its business, financial condition and results of operations.
These risks and uncertainties include those risks described in
Oportun's filings with the Securities and Exchange Commission,
including Oportun's most recent annual report on Form 10-K and most
recent quarterly report on Form 10-Q. Therefore, actual results may
differ materially and adversely from those expressed in any
forward-looking statements. The forward-looking statements included
herein are made only as of the date hereof, and Oportun undertakes
no obligation to revise or update any forward-looking statements
for any reason.
Contacts
Investor ContactDorian
Hare(650) 590-4323ir@oportun.com
Media ContactUsher
Lieberman(650) 769-9414usher.lieberman@oportun.com
Oportun and the Oportun logo are registered
trademarks of Oportun, Inc.
Oportun Financial
CorporationABOUT NON-GAAP FINANCIAL
MEASURES(unaudited)
This press release presents information about
the Company’s Adjusted Net Income, which is a non-GAAP financial
measure provided as a supplement to the results provided in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The following table reconciles
this non-GAAP financial measure to the most directly comparable
financial measure prepared in accordance with GAAP. The Company
believes that this Non-GAAP financial measure can provide a useful
measure for period-to-period comparisons of Oportun's core business
and useful information to investors and others in understanding and
evaluating its operating results. However, this non-GAAP financial
measure is not calculated in accordance with GAAP and should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. This
non-GAAP financial measure does not reflect a comprehensive system
of accounting, differs from GAAP measures with the same names, and
may differ from non-GAAP financial measures with the same or
similar names that are used by other companies.
Adjusted Net IncomeThe Company
defines Adjusted Net Income as net income adjusted to eliminate the
effect of certain items as described below. The Company believes
that Adjusted Net Income is an important measure of operating
performance because it allows management, investors, and Oportun's
board of directors to evaluate and compare its operating results,
including return on capital and operating efficiencies, from period
to period, excluding the after-tax impact of non-cash, stock-based
compensation expense and certain non-recurring charges.
- The Company
believes it is useful to exclude the impact of income tax expense
(benefit), as reported, because historically it has included
irregular income tax items that do not reflect ongoing business
operations. The Company also includes the impact of normalized
income tax expense by applying a normalized statutory tax
rate.
- The Company
believes it is useful to exclude the impact of certain
non-recurring charges because it does not believe that these items
reflect its ongoing business operations.
- The Company
believes it is useful to exclude stock-based compensation expense
because it is a non-cash charge.
Oportun Financial
CorporationRECONCILIATION OF NON-GAAP FINANCIAL
OUTLOOK(in millions, unaudited)
|
|
Three Months EndedDecember 31,
2022 |
Adjusted Net
Income |
|
Low |
|
High |
Net income (loss) |
|
$ |
(10.7 |
) |
|
$ |
(7.8 |
) |
Adjustments: |
|
|
|
|
Income tax expense |
|
|
0.6 |
|
|
|
0.5 |
|
Stock-based compensation expense |
|
|
6.9 |
|
|
|
6.9 |
|
Acquisition and integration related expenses |
|
|
7.3 |
|
|
|
7.3 |
|
Adjusted income before
taxes |
|
|
4.1 |
|
|
|
6.9 |
|
Normalized income tax expense |
|
|
1.1 |
|
|
|
1.9 |
|
Adjusted Net
Income |
|
$ |
3.0 |
|
|
$ |
5.0 |
|
|
|
|
|
|
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