Oportun Financial Corporation Common Stock 2026 Q2 Earnings Call

Please go ahead. Thanks, and hello, everyone.

With me to discuss Oportun's second quarter 2026 results are Doug Bland, our Chief Executive Officer, and Paul Appleton, our Interim Chief Financial Officer, Treasurer, and Head of Capital Markets. I 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 originations 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 10-Q filing for the quarter ended June 30th, 2026. 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 conditions and results of operations.

A full list of definitions can be found in our earnings materials available at the investor relations section of 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 second quarter 2026 financial supplement, and the appendix section of the second quarter 2026 earnings presentation, all of which will be available at the investor relations section of our website at investor.oportun.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 In addition, this call is being webcast, and an archived version will be available after the call, along with a copy of our prepared remarks.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 turn the call over to Doug.

Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. Q2 was a strong quarter and an important step forward for Oportun. We exceeded the high end of each of the second quarter guidance ranges provided last quarter. Total revenue was $233 million, $1 million above the high end of our guidance range, supported by modest year-over-year originations growth. We generated $49 million in adjusted EBITDA. This was well above our guidance range and represented 56% year-over-year growth. Our annualized net charge-off rate improved 65 basis points sequentially to 12%, outperforming our guidance range of 12.2% plus or minus 15 basis points. I want to thank the team for the focus and execution behind these results. Our bottom-line performance was also strong.

We delivered our seventh consecutive quarter of GAAP profitability with our GAAP EPS of $0.17 growing 21% year-over-year, an adjusted EPS of $0.42 growing 35%. The quarter demonstrates the company is executing. Revenue was better than expected, profitability improved, credit performance improved sequentially relative to our expectations, and the balance sheet continued to strengthen. Our revised full-year guidance that Paul will share reflects an improved annualized net charge-off rate and increased adjusted EBITDA at their respective midpoints. The improved charge-off rate reflects continuing operational improvement, and Paul will explain how our EBITDA guidance includes a favorable non-cash change in interest expense recognition. On our first quarter call, I said I would return with a more defined path forward. My conclusion is that Oportun has a differentiated franchise and a materially stronger financial foundation. Our next phase depends on making growth broader, more precise, and more repeatable.

Near term, we are focused on three priorities: responsibly rebuilding new member growth, deepening our member relationships in lower-risk segments, and preserving the funding expense and capital discipline that has restored profitability. I am now just over 100 days into my tenure as CEO. During this period, I completed a broad assessment of the business. I spent time with our teams, reviewed our products, risk management framework, funding position, operations, technology, and member experience. I also met with key external stakeholders, including investors and capital providers. I have begun working with the board and leadership team on a long-range planning process. While we are not ready to share the full details of that work today, I do want to share the conclusions that are already shaping how we operate. First, Oportun has built something genuinely differentiated over the past 20 years.

We serve a large and underserved market that continues to need responsible access to credit and tools to manage everyday financial needs. We do this seamlessly through a bilingual, omni-channel model designed to serve consumers whom traditional providers often overlook. Our mission to empower members to build a better future remains highly relevant. Our members also demonstrate strong trust in Oportun. Across our app stores, Google and Trustpilot, we have earned more than 365,000 five-star reviews. Nine out of 10 members tell us they would recommend Oportun to a friend. We believe that trust is a real asset, and we intend to protect and build upon it. Second, the team has done meaningful work to stabilize the business. Over the past year, Oportun has improved its balance sheet, reduced funding costs, managed expenses with discipline, and increased liquidity. That progress continued in Q2.

Unrestricted cash increased to $140 million at quarter end. Operating expenses remained stable. The balance sheet optimization actions we have taken provide greater flexibility to further diversify funding and evaluate opportunities to refinance or retire our higher cost debt over time. Third, our next phase requires disciplined growth. Originations returned to modest year-over-year growth in Q2, driven by returning members and secured lending. The resulting mix delivered strong credit performance, demonstrating the value of our existing member relationships and the attractive risk-adjusted economics of secured lending. To sustain growth over time, we also need to expand responsible access for new members. Strengthening our new member engine through more precise selection and the right product fit is one of our highest priorities. Delinquencies are performing better than anticipated, and we strengthened the leadership team with the appointment of Sean Rowles as chief risk officer.

Sean brings deep experience in consumer credit, fraud, collections, and financial services operations. Our goal is not to loosen credit. It is to become more precise. We are focused on optimizing the balance between risk and reward using data and analytics to make the best decisions about approval, pricing, amount, and term. One important step to balance risk and reward was the launch of risk-based pricing in July. It gives us greater flexibility to differentiate terms more precisely across risk tiers. This can help us retain attractive lower risk and returning members while responsibly serving additional qualified applicants. We are still early in the rollout and will scale based on observed cohort economics. We also continue to execute on our payment protection offering launched in April. This is designed to support members during qualifying disruptions to their loan payments and to improve portfolio resilience over time.

Overall, we will scale deliberately, pursuing growth only where it expands responsible access and meets our standards for attractive risk-adjusted returns and durable credit performance. To execute against these priorities, we are also increasing operating cadence and accountability across the business. We are establishing defined routines and performance monitoring using technology and data to improve decision-making and focusing the organization on the critical few priorities that can move the company forward. My conclusion is clear. Oportun has a strong mission, a differentiated member franchise, and a much stronger financial foundation than it had a year ago. We are now focused on translating these advantages into durable growth and more predictable returns. Q2 was an encouraging early proof point. We exceeded guidance, improved profitability, reduced charge-offs faster than expected, and continued strengthening the balance sheet.

We are moving from stabilization toward disciplined growth. We intend to scale only where member outcomes and risk-adjusted returns meet our standards. With that, I will turn the call over to Paul for a more detailed review of our second quarter financial results. He will also provide our third quarter guidance and discuss our updated full-year outlook.

Over to you, Paul. Thank you, Doug, and good afternoon, everyone.