OppFi Q2 Earnings Call Highlights

OppFi reported revenue of $145 million for the second quarter, up 1.9% from the prior-year period and a record for any second quarter in company history, according to CFO Pam Johnson. Originations declined about 9% year over year to $212 million as the company tightened underwriting in customer segments where it viewed risk-adjusted returns as less attractive. Johnson said the underwriting actions were intended to preserve portfolio quality and long-term profitability amid variability in consumer credit trends. Adjusted net income declined 27% year over year to approximately $29 million. Adjusted earnings per share fell to $0.33 from $0.45 a year earlier. Adjusted net income margin was 19.8%. Total adjusted operating expenses were about $49 million, or 34% of revenue, compared with 35% of revenue in the prior-year quarter. On an unadjusted basis, expenses represented 43% of revenue, compared with 39% a year earlier, reflecting one-time expenses tied to the proposed BNC transaction and corporate simplification efforts. Net charge-offs increased during the quarter. Net charge-offs as a percentage of revenue rose to about 40% from 32% a year earlier, while net charge-offs as a percentage of receivables increased to approximately 52% from 43%. Johnson said the charge-off metrics can appear elevated during slower growth periods because of denominator effects. She also pointed to improved recoveries, which rose to about $15 million from $11 million in the prior-year period. OppFi expects to launch a line of credit product with one of its bank partners in September, following testing during the second quarter involving pricing, term structure and customer behavior. The product’s launch had originally been planned earlier, and Schwartz described the updated timing as effectively a two-month delay from the prior plan. The line of credit will initially expand OppFi into three new geographies and target new customers. The company later expects to test a market in which consumers can choose between the line of credit and installment loan products.