Q2 2024 Oportun Financial Corp Earnings Call

August 8, 2024

Dorian Hare: I'll remind everyone on the call or webcast that some of the remarks made today will include forward-looking statements relative to our business, future results of operations and financial position, planned products and services, business strategy, expense savings measures, statements regarding our senior secured term loan, 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.

Operator: I'll remind everyone on the call or webcast that some of the remarks made today will include forward-looking statements relative to our business, future results of operations and financial position, plan products and services, business strategy, expense savings measures, statements regarding our senior secured term loan, and plans and objectives of the 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 in our upcoming Form 10-Q filing for the quarter-ended June 30th, 2024.

I'll remind everyone on the call or webcast said some of the remarks made today will include forward looking statements relative to our business future results of operations and financial position Clinton products and services business strategy expense savings measures statements regarding our senior secured term loan and plans and objectives.

The management and 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.

Dorian Hare: A more detailed discussion of the risk factors that could cause these results to differ materially is 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 30, 2024. 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.

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 at our upcoming Form 10-Q filing for the quarter ended June 30th 2024.

Operator: 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.

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.

Operator: Also, on today's call, we will present both gap and non-gap financial measures, which we believe can be useful measures for the 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 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, 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 2024 financial supplement, and the appendix section of the second quarter 2024 earnings presentation, all of which are available at the Investor Relations section of our website at investor.opportun.com.

Dorian Hare: 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 can be found in our earnings materials available in 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.

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 will provide useful information to investors regarding our financial condition and results of operations.

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.

Dorian Hare: A reconciliation of non-gap-to-gap financial measures is included in our earnings press release, our second quarter 2024 financial supplement, and the appendix section of the second quarter 2024 earnings presentation, all of which are available on 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 now turn the call over to Raul.

A reconciliation of non-GAAP to GAAP financial measures is included in our earnings press release, our second quarter 2024 financial supplement and the appendix section of the second quarter 2024 earnings presentation, all of which are available at the Investor Relations section of our website at investor that opportune dotcom and.

Operator: In addition, this call is being broadcast, and an archive version will be available after the call, along with a copy of our prepared remarks.

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 to oriented and good afternoon, everyone. Thank you for joining us overall I'm pleased with our second quarter results and the progress we are making towards our long term profit.

Raul Vazquez: With that, I will now turn the call over to Rowell. Thanks, Dorian, and good afternoon everyone. Thank you for joining us. Overall, I'm pleased with our second quarter results and the progress we are making towards our long-term profitability targets.

Raul Vazquez: Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. Overall, I'm pleased with our second quarter results and the progress we are making towards our long-term profitability targets. In addition, we further focused our business on our core competencies by signing an LOI to sell our credit card business and entering into a new collaboration with Western Union that provides access to millions of new potential customers at a lower acquisition cost. Let me start by talking about our strong Q2 credit performance with a focus on five key points that reflect the fine-tuning of our credit box.

Ability targets. In addition, we further focused our business on our core competencies by signing an LOI to sell our credit card business and entering into a new collaboration with Western Union that provides access to millions of new potential customers at a lower acquisition cost let.

Raul Vazquez: In addition, we further focused our business on our core competencies by signing an LOI to sell our credit card business and entering into a new collaboration with Western Union that provides access to millions of new potential customers at a lower acquisition cost. Let me start by talking about our strong Q2 credit performance with a focus on five key points that reflect the fine tuning of our credit box. First, our annualized net charge-off rate was 12.3%, which was 23 basis points better than last year's level. Second, when measured in dollars, our quarterly net charge-off declined year over year for the third consecutive quarter; in this instance, by 10%.

Speaker Change: Let me start by talking about our strong Q2 credit performance with a focus on five key points that reflect the fine tuning of our credit box first our annualized net charge off rate was 12, 3%, which was 23 basis points better than last year's level.

Raul Vazquez: First, our annualized net charge-off rate was 12.3%, which was 23 basis points better than last year's level. Second, when measured in dollars, our quarterly net charge-offs declined year-over-year for the third consecutive quarter, by 10%. Third, a key component of how we've been able to improve credit performance has been to decrease average loan sizes, which declined 21% year-over-year in Q2, or by $852 per loan.

Speaker Change: When measured in dollars, our quarterly net charge offs declined year over year for the third consecutive quarter. In this instance by 10% third a key component of how we've been able to improve credit performance has been to decrease average loan sizes, which declined 21% year over year in Q2 or by eight.

Raul Vazquez: Third, a key component of how we've been able to improve credit performance has been to decrease average loan sizes, which declined 21% year over year in Q2, or by $852 per loan. Fourth, the actions we've taken to improve credit are clearly paying off. As you can see on slide eight of our earnings presentation, the losses on our front book are approximately 400 basis points lower, 12 plus months after disbursement, than losses on our back book. More importantly, as you can see on slide 9, we've added a breakout of our annualized net charge-off rate for the quarter by front book versus back book.

Speaker Change: Hundreds of $52 per loan.

Raul Vazquez: Fourth, the actions we've taken to improve credit are clearly paying off. As you can see on slide 8 of our earnings presentation, the losses on our front book are approximately 400 basis points lower, 12 plus months after disbursement, than losses on our back book. More importantly, as you can see on slide 9, we've added a breakout of our annualized net charge-off rate for the quarter by front book versus back book. In Q2, the back book had an annualized net charge-off rate of 21.2%, while the front book was at 10.6%, which is within the 9 to 11% net charge-off rate that we are targeting in our unit economics model.

Speaker Change: The actions, we've taken to improve credit are clearly paying off.

As you can see on slide eight of our earnings presentation. The losses on our front book are approximately 400 basis points lower 12, plus months after disbursement and losses on our back book.

Speaker Change: More importantly, as you can see on slide nine we've added a breakout of our annualized net charge off rate for the quarter by front book versus back book in Q2. The back book had an annualized net charge off rate of 21, 2%. While the front book was at 10, 6%, which is within the 9% to 11% net charge off.

Raul Vazquez: In Q2, the back book had an annualized net charge-off rate of 21.2 percent, while the front book was at 10.6 percent, which is within the 9 to 11 percent net charge-off rate that we are targeting in our unit economics model. Finally, I'm pleased with the progress we continue to make with our 30-plus day delinquencies, which were down 30 basis points to 4.96 percent. That's the second consecutive quarter of year-over-year declines, and we know that lower delinquencies bode well for future credit performance.

Speaker Change: Right that we are targeting in our unit economics model.

Raul Vazquez: Finally, I'm pleased with the progress we continue to make with our 30 plus day delinquencies, which were down 30 basis points to 4.96%. That's the second consecutive quarter of year-over-year declines, and we know that lower delinquencies bode well for future credit performance. In summary, we feel good about the quality of the credit we are originating in this environment. That leads me to the next highlight of Q2, our steady progress towards getting back to portfolio growth.

Speaker Change: Finally, I am pleased with the progress we continue to make with our 30, plus day delinquencies, which were down 30 basis points to 496%.

Speaker Change: The second consecutive quarter of year over year declines and we know that lower delinquencies bode well for future credit performance in summary, we feel good about the quality of the credit we are originating in this environment.

Raul Vazquez: In summary, we feel good about the quality of the credit we are originating in this environment.

Raul Vazquez: That leads me to the next highlight of Q2: our steady progress towards getting back to portfolio growth. As you can see on slide 10, we had several consecutive quarters of origination levels that were lower than the prior year's levels. These negative growth rates have been driven by our stated focus on quality, not quantity, of originations. We have been laser focused on conservative underwriting and improving our loss rates. At this time, the diminishing back book and the solid performance of our front book, which I just covered, have given us confidence that we are making high-quality loans.

Speaker Change: That leads me to the next highlight of Q2, our steady progress towards getting back to your portfolio growth as you can see on slide 10, we had several consecutive quarters of origination levels that were lower than the prior year's levels. These negative growth rates have been driven by our stated focus on quality not quantity of.

Raul Vazquez: As you can see on slide 10, we've had several consecutive quarters of origination levels that were lower than the prior year's levels. These negative growth rates have been driven by our stated focus on quality, not quantity of originations. We have been laser focused on conservative underwriting and improving our loss rate. At this time, the diminishing back book and the solid performance of our front book, which I just covered, have given us confidence that we are making high-quality loans. Given these facts, we are pleased to be returning to the normal seasonal pattern for origination growth.

Speaker Change: <unk>, we have been laser focused on conservative underwriting and improving our loss rates.

Speaker Change: At this time, the diminishing back book and the solid performance of our front book, which I just covered have given us confidence that we are making high quality New islands.

Raul Vazquez: Given these facts, we are pleased to be returning for the normal seasonal pattern for originations growth. While Q2 originations were 10 percent lower year-over-year, we expect Q3 originations to be roughly flat to last year's levels.

Speaker Change: Given these facts, we are pleased to be returning to the normal seasonal pattern for originations growth.

Raul Vazquez: While Q2 originations were 10% lower year over year, we expect Q3 originations to be roughly flat to last year's level. The next highlight of Q2 was the significant progress on cost reduction actions. Our GAAP operating expenses were $109 million, down 20% year-over-year, and adjusted operating expenses were $94 million, which is the lowest level in the last three years. We are much more efficient today than we were when we initiated significant cost reductions in the third quarter of 2022.

Speaker Change: While Q2 originations were 10% lower year over year, we expect Q3 originations to be roughly flat to last year's levels.

Raul Vazquez: The next highlight of Q2 was the significant progress on cost reduction actions. Our gap operating expenses were $109 million, down 20 percent year-over-year, and adjusted operating expenses were $94 million, which is the lowest level in the last three years. We are much more efficient today than we were when we initiated significant cost reductions in the third quarter of 2022. Since Q2, 2022, our adjusted operating expenses, excluding non-cash and non-recurring charges, have declined by 35 percent, while our adjusted optics ratio as a percentage of owned principal balance has improved by almost 900 basis points. We achieved an all-time low in Q2 2024 with an adjusted optics ratio of 13.8 percent.

Speaker Change: The next highlight of Q2 was the significant progress on cost reduction actions are GAAP operating expenses were $109 million down 20% year over year and adjusted operating expenses were $94 million, which is the lowest level in the last three years.

Speaker Change: We are much more efficient today than we were when we initiated significant cost reductions in the third quarter of 2022.

Raul Vazquez: Since Q2 2022, our adjusted operating expenses, excluding non-cash and non-recurring charges, have declined by 35%, while our adjusted OPEX ratio as a percentage of owned principal balance has improved by almost 900 basis points. We achieved an all-time low in Q2 2024 with an adjusted OPEX ratio of 13.8%.

Speaker Change: Since Q2 2022, our adjusted operating expenses, excluding noncash and nonrecurring charges have declined by 35%, while our adjusted Opex ratio as a percentage of owned principal balance has improved by almost 900 basis points.

Speaker Change: We achieved an all time low in Q2 2024 with an adjusted Opex ratio of 13, 8%.

Raul Vazquez: We expect to make improvements in our adjusted optics ratio in the future through continued strong financial discipline and are reiterating our expectation to reduce gap operating expenses to $97.5 million or below by the fourth quarter. And finally, we were profitable for the second consecutive quarter on an adjusted net income basis at $3.2 million and drove a significant year-over-year improvement in adjusted EBITDA. At $30 million, our adjusted EBITDA reflected 109 percent year-over-year growth. In summary, I'm proud of how the team executed in Q2 and pleased that we continue to make good progress in the 2024 business recovery.

Raul Vazquez: We expect to make improvements in our adjusted OPEX ratio in the future through continued strong financial discipline and are reiterating our expectation to reduce GAAP operating expenses to $97.5 million or below by the fourth quarter. And finally, we were profitable for the second consecutive quarter on an adjusted net income basis at $3.2 million and drove a significant year-over-year improvement in adjusted EBITDA. At $30 million, our adjusted EBITDA reflected 109% year-over

Speaker Change: We expect to make improvements in our adjusted Opex ratio in the future through continued strong financial discipline and are reiterating our expectation to reduce GAAP operating expenses to $97 $5 million or below by the fourth quarter.

Speaker Change: And finally, we were profitable for the second consecutive quarter on an adjusted net income basis at $3 $2 million and drove a significant year over year improvement in adjusted EBITDA.

Speaker Change: At $30 million, our adjusted EBITA reflected 109% year over year growth.

Raul Vazquez: In summary, I'm proud of how the team executed in Q2 and pleased that we continue to make good progress on the 2024 business recovery. More importantly, the positive trends in credit performance and originations, combined with our lower expense levels, mean we are positioned to improve upon our performance in the second half, setting up a strong runway heading into 2025. Before I turn the call over to Jonathan, I want to share two additional pieces of good news.

Speaker Change: In summary, I'm proud of how the team executed in Q2 and pleased that we continue to make good progress in the 'twenty 'twenty four business recovery.

Raul Vazquez: More importantly, the positive trends in credit performance and originations combined with our lower expense levels mean we are positioned to improve upon our performance in the second half, setting up a strong runway heading into 2025.

Speaker Change: More importantly, the positive trends in credit performance and originations combined with our lower expense levels mean, we are positioned to improve upon our performance in the second half setting up a strong runway heading into 2025.

Raul Vazquez: Before I turn the call over to Jonathan, I want to share two additional pieces of good news. First, I'm pleased to announce that we've signed a non-binding letter of intent to sell our credit card portfolio to a leading credit card marketer and servicer. The transaction will simplify our product portfolio and enhance our focus on our three core products. From secure personal loans, secure personal loans, and our award-winning Set and Save savings product. We ran a competitive sales process that resulted in multiple bids, and we selected the best proposal. Based upon this proposal, we expect to sell the credit card portfolio for 70% of the receivables balance of current and less than 30 days to link with receivables as of the closing date.

Speaker Change: Before I turn the call over to Jonathan I want to share two additional pieces of good news.

Raul Vazquez: First, I'm pleased to announce that we've signed a non-binding letter of intent to sell our credit card portfolio to a leading credit card marketer and servicer. The transaction will simplify our product portfolio and enhance our focus on our three core products, unsecured personal loans, secured personal loans, and our award-winning set and save savings product. We ran a competitive sales process that resulted in multiple bids, and we selected the best proposal. Based on this proposal, we expect to sell the credit card portfolio for 70% of the receivables balance of current and less than 30-day delinquent receivables as of the closing.

Speaker Change: First I am pleased to announce that we've signed a non binding letter of intent to sell our credit card portfolio to a leading credit card marketer and servicer.

Speaker Change: The transaction will simplify our product portfolio and enhance our focus on our three core products unsecured personal loans secured personal loans and our award winning that insane savings product.

Speaker Change: We ran a competitive sales process that resulted in multiple bids and we selected the best proposal.

Speaker Change: Based upon this proposal, we expect to sell the credit card portfolio for 70% of the receivables balance of current and less than 30 day delinquent receivables as of the closing date.

Operator: 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 in our upcoming form 10Q filing for the quarter-ended June 30th, 2024.

Raul Vazquez: We are in documentation now and currently expect to close by the end of the third quarter. The initiation of the transaction triggered a $36 million unfavorable one-time fair value mark to our credit card portfolio for an approximately $26 million reduction in stockholders' equity. We expect the sale to have an approximately $11 million negative impact on 2024 revenue due to no longer earning revenue on the sold receivables. However, we expect the sale to be accreted by $4 million to adjust the beta this year, as lower credit losses and operating expenses more than offset the loss of revenue.

Raul Vazquez: We are in documentation now and currently expect to close by the end of the third quarter. The initiation of the transaction triggered a $36 million unfavorable one-time fair value mark to our credit card portfolio for an approximately $26 million reduction in stockholders' equity. We expect the sale to have an approximately $11 million negative impact on 2024 revenue due to no longer earning revenue on the solder. However, we expect the sale to be accretive by $4 million to adjusted EBITDA this year as lower credit losses and operating expenses more than offset the loss of.

Speaker Change: We are in documentation now and currently expect to close by the end of the third quarter.

Speaker Change: The initiation of the transaction triggered a $36 million unfavorable one time fair value Mark to our credit card portfolio for an approximately $26 million reduction in stockholders' equity.

Operator: 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.

Speaker Change: We expect the sale to have an approximately $11 million negative impact on 2024 revenue due to no longer earning revenue on the sold receivables.

Operator: Also on today's call we will present both gap and non-gap financial measures which we believe can be useful measures for the 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 can be found in our earnings materials available at the Investor Relations section on our website. Non-gap financial measures are presented in addition to a not as a substitute for financial measures calculated in accordance with gap.

Speaker Change: However, we expect the sale to be accretive by $4 million to adjusted EBITDA. This year as the lower credit losses, and operating expenses more than offset the loss in revenue.

Raul Vazquez: We expect 2025 adjustity beta favorability resulting from the credit card sale to be approximately $11 million.

Speaker Change: We expect 2025, adjusted EBITDA favorability, resulting from the credit card sale to be approximately $11 million.

Raul Vazquez: Second, I'm excited to share the details of our new lending collaboration with Western Union, a leader in cross-border money transfers with 90% global brand recognition. Under the agreement, we have the potential to reach their millions of customers who are similar to our own. Structured like our other lending is the service agreements; it only requires us to pay for leads when alone that has met our underwriting criteria has been funded. This is a significant opportunity to add new applicants to our originations funnel and generate incremental new loan volume under our current credit standards.

Raul Vazquez: We expect 2025 adjusted EBITDA favorability, resulting from the credit card sale, to be approximately $11 million. Second, I'm excited to share the details of our new lending collaboration with Western Union, a leader in cross-border money transfers with 90% global brand recognition. Under the agreement, we have the potential to reach their millions of customers who are similar to our own. Structured like our other lending-as-a-service agreements, it only requires us to pay for LEADS when a loan that has met our underwriting criteria has been funded.

Speaker Change: Second I am excited to share the details of our new lending collaboration with Western Union a leader in cross border money transfers with 90% Global brand recognition under the agreement we have the potential to reach their millions of customers who are similar to our own.

Operator: A reconciliation of non-gap to gap financial measures is included in our earnings press release, our second quarter 2024 financial supplement, and the appendix section of the second quarter 2024 earnings presentation, all of which are available at the Investor Relations section of our website at investor.opportun.com.

Speaker Change: Structured like our other lending as a service agreements it only requires us to pay for leads went alone that has met our underwriting criteria has been funded.

Operator: In addition, this call is being broadcast and an archive version will be available after the call along with a copy of our prepared remarks.

Raul Vazquez: This is a significant opportunity to add new applicants to our Originations Funnel and generate incremental new loan volume under our current credit standards. With that, I will turn it over to Jonathan for additional details on our second quarter financial performance as well as our third quarter and for your guidance. Jonathan will also discuss how this translates into progress towards our long-term unit economic objective.

Speaker Change: This is a significant opportunity to add new applicants to our originations funnel and generate incremental new loan volume under our current credit standards.

Dorian Hare: With that, I will now turn the call over to Rowell. Thanks, Dorian, and good afternoon everyone. Thank you for joining us.

Jonathan Coblentz: With that, I will turn it over to Jonathan for additional details on our second quarter financial performance, as well as our third quarter and full year guidance. Jonathan will also discuss how this translates to progress towards our long-term, unique economic objectives. Thanks, Raoul, and good afternoon everyone. As Raoul mentioned, we had a strong second quarter, and our position to improve upon our performance in the second half of the year. The anticipated sale of the credit card portfolio and exciting new lending as a service collaboration with Western Union are integral milestones towards focusing to business on our core products for the reducing our expense base and growing profitably over the long term.

Speaker Change: With that I will turn it over to Jonathan for additional details on our second quarter financial performance as well as our third quarter and full year guidance.

Raul Vazquez: Overall, I'm pleased with our second quarter results and the progress we are making towards our long-term profitability targets. In addition, we further focused our business on our core competencies by signing an LOI to sell our credit card business and entering into a new collaboration with Western Union that provides access to millions of new potential customers at a lower acquisition cost. Let me start by talking about our strong Q2 credit performance with a focus on five key points that reflect the fine tuning of our credit box.

Jonathan: Jonathan will also discuss how this translates to progress towards our long term unit economic objectives. Thanks, Raul and good afternoon, everyone. As Rob mentioned, we had a strong second quarter and are positioned to improve upon our performance in the second half of the year the.

Jonathan Coblentz: Thanks, Raul, and good afternoon, everyone. As Raul mentioned, we had a strong second quarter and are positioned to improve upon our performance in the second half of the year. The anticipated sale of the credit card portfolio and exciting new lending-as-a-service collaboration with Western Union are integral milestones towards focusing the business on our core products, further reducing our expense base, and growing profitably over the long term. As shown on slide 6, Oportun delivered total revenue of $250 million, and we were profitable on an adjusted basis for the second consecutive quarter with adjusted net income of $3.2 million for adjusted EPS of $0.08. Continuing to operate under a conservative credit posture, originations of $435 million were down 10% year over year. However, sequentially, originations were up 29%, aligning with the typical seasonal pattern for growth after the first quarter.

Jonathan: The anticipated sale of the credit card portfolio and exciting new lending as a service collaboration with Western Union are integral milestones towards focusing the business on our core products further reducing our expense base and growing profitably over the long term.

Raul Vazquez: First, our annualized net charge off rate was 12.3% which was 23 basis points better than last year's level. Second, when measured in dollars our quarterly net charge off declined year over year for the third consecutive quarter in this instance by 10%. Third, a key component of how we've been able to improve credit performance has been to decrease average loan sizes, which declined 21% year over year in Q2 or by $852 per loan.

Jonathan Coblentz: As shown on flight six, Opportune delivered total revenue of $250 million and we were profitable on an adjusted basis for the second consecutive quarter with adjusted net income of $3.2 million for adjusted EPS of 8 cents. Continuing to operate under a conservative credit posture, originations of $435 million were down 10% year over year. Sequentially, originations were up 29%, aligning with the typical seasonal pattern for growth after the first quarter. Total revenue of $250 million to climb by 6%, driven by an 8% to climb our average daily principal balance under our conservative credit posture, partially offset by price increases as portfolio yield increased 167 basis points year-over-year, improving to 33.9%.

Jonathan Coblentz: Total revenue of $250 million declined by 6%, driven by an 8% decline in our average daily principal balance under our conservative credit posture, partially offset by price increases as portfolio yield increased 167 basis points year over year, improving to 33.9%. Net revenue was $60 million, down 49% year-over-year, primarily due to the one-time $36 million unfavorable fair value mark to our credit card portfolio that Raul mentioned, along with the total revenue decline and higher interest expense.

Speaker Change: As shown on slide six opportune delivered total revenue of $250 million and we were profitable on an adjusted basis for the second consecutive quarter with adjusted net income of $3 2 million for adjusted EPS of eight cents.

Jonathan: Continuing to operate under a conservative credit posture originations of $435 million were down 10% year over year sequentially originations were up 29% aligning with the typical seasonal pattern for growth after the first quarter.

Raul Vazquez: Fourth, the actions we've taken to improve credit are clearly paying off. As you can see on slide eight of our earnings presentation, the losses on our front book are approximately 400 basis points lower, 12 plus months after disbursement, then losses on our back book. More importantly, as you can see on slide 9, we've added a breakout of our annualized net charge off rate for the quarter by front book versus back book.

Jonathan: Total revenue of $250 million declined by 6% driven by an 8% decline in our average daily principal balance under our conservative credit posture, partially offset by price increases as portfolio yield increased 167 basis points year over year, improving to 33, 9%.

Raul Vazquez: In Q2, the back book had an annualized net charge off rate of 21.2 percent, while the front book was at 10.6 percent, which is within the 9 to 11 percent net charge off rate that we are targeting in our unit economics model. Finally, I'm pleased with the progress we continue to make with our 30 plus day delinquencies, which were down 30 basis points to 4.96 percent. That's the second consecutive quarter of year-over-year declines, and we know that lower delinquencies both well for future credit performance.

Jonathan Coblentz: Net revenue was $60 million, down 49% year-over-year, primarily due to the one-time $36 million unfavorable fair value mark to our credit card portfolio that Raul mentioned, along with the total revenue decline in higher interest expense. Our total net decrease in fair value of $136 million was primarily driven by current to elaborate on the impact of selling the credit card portfolio. The agreed upon price at 70% of the receivables being sold reflects the highest offer that we received as part of our strategic review process, thus setting the new fair value mark. Interest expense at $54 million was up $13 million year-over-year; this was primarily driven by increased debt outstanding and an increase in our cost of debt to 7.7% versus 5.6% in the year-ago period, reflecting the higher rate environment.

Jonathan: Net revenue was $60 million down 49% year over year, primarily due to the onetime $36 million unfavorable fair value Mark.

Rolla: Two our credit card portfolio that Rolla mentioned, along with the total revenue decline and higher interest expense.

Jonathan Coblentz: Our total net decrease in fair value of $136 million was primarily driven by current period charge-offs of $84 million and the credit card fair value mark. To elaborate on the impact of selling the credit card portfolio, the agreed-upon price at 70% of the receivables being sold reflects the highest offer that we received as part of our strategic review process, thus setting the new fair value mark. Interest expense of $54 million was up $13 million year over year.

Rolla: Our total net decrease in fair value of $136 million was primarily driven by current period charge offs of $84 million and the credit card fair value Mark to elaborate on the impact of selling the credit card portfolio. The agreed upon price at 70% of the receivables being sold reflects the highest.

Raul Vazquez: In summary, we feel good about the quality of the credit we are originating in this environment.

Raul Vazquez: That leads me to the next highlight of Q2, our steady progress towards getting back to portfolio growth. As you can see on slide 10, we had several consecutive quarters of origination levels that were lower than the prior year's levels. These negative growth rates have been driven by our stated focus on quality, not quantity, of originations. We have been laser focused on conservative underwriting and improving our loss rates. At this time, the diminishing back book and the solid performance of our front book, which I just covered, have given us confidence that we are making high quality loans. Given these facts, we are pleased to be returning for the normal seasonal pattern for originations growth. While Q2 originations were 10 percent lower year-over-year, we expect Q3 originations to be roughly flat to last year's levels.

Jonathan: After that we received as part of our strategic review process, thus setting the new fair value Mark.

Jonathan: Interest expense of $54 million was up $13 million year over year. This was primarily driven by increased debt outstanding and an increase in our cluster of debt to seven 7% versus five 6% in the year ago period, reflecting the higher rate environment.

Jonathan Coblentz: This was primarily driven by increased debt outstanding and an increase in our cost of debt to 7.7% versus 5.6% in the year-ago period, reflecting the higher rate environment. Turning now to operating expenses and efficiency, we continue to see the benefit of our cost reduction initiatives. Our $109 million in total operating expenses in Q2 reflected a 20% decrease from the prior year period while including a $6 million impairment of the right of use asset for our Bay Area headquarters and $2 million in workforce optimization expenses relating to the reductions in force we enacted in the second half of May.

Jonathan Coblentz: Turning now to operating expenses and efficiency, we continue to see the benefit of our cost reduction initiatives. Our $109 million until the operating expenses in Q2 reflected a 20% decrease from the prior year period, while including a $6 million impairment of the right-of-use asset for our Bay Area headquarters and $2 million in workforce optimization expenses relating to the reduction in workforce we enacted in the second half of May. We will continue to drive our cost structure lower in the second half of 2024 and remain on track to achieve $97.5 million in Q4 GAAP operating expenses.

Jonathan: Turning now to operating expenses and efficiency, we continue to see the benefit of our cost reduction initiatives are $109 million in total operating expenses in Q2 reflected a 20% decrease from the prior year period, while including a $6 million impairment of right of use asset for our Bay area headquarters and 2 million.

Jonathan: And workforce optimization expenses relating to the reductions in force we enacted in the second half of May.

Jonathan Coblentz: We will continue to drive our cost structure lower in the second half of 2024 and remain on track to achieve $97.5 million in Q4 GAAP operating expenses. In the second quarter, our sales and marketing expenses were just over $16 million, down 15% year over year, and I'm pleased to share that our cap of $122 was a new low for us as a public company, down 25% year over year, driven by our cost discipline.

Jonathan: We will continue to drive our cost structure lower in the second half of 2024 and remain on track to achieve $97 5 million in Q4 GAAP operating expenses.

Jonathan Coblentz: In the second quarter, our sales and marketing expenses were just over $16 million, down 15% year-over-year, and I'm pleased to share that our CAC of $122 was a new low for us as a public company, down 25% year-over-year, driven by our cost discipline. For the quarter, we recorded a net income of $3 million compared to $6 million in the prior year quarter and adjusted the EPS of 8 cents versus 17 cents. The decline was principally driven by lower revenue due to the lower average debted principal balance, partially offset by higher yield and lower adjusted operating expenses.

Jonathan: In the second quarter, our sales and marketing expenses were just over $16 million down 15% year over year and I am pleased to share that our CAC of $122 was a new low for us as a public company down 25% year over year, driven by our cost discipline.

Jonathan Coblentz: For the quarter, we recorded adjusted net income of $3 million compared to $6 million in the prior year quarter and adjusted EPS of 8 cents versus 17 cents. The decline was principally driven by lower revenue due to a lower average daily principal balance, partially offset by higher yield and lower adjusted operating expenses.

Jonathan: For the quarter, we recorded adjusted net income of $3 million compared to $6 million in the prior year quarter, and adjusted EPS of <unk> versus 17.

Raul Vazquez: We achieved an all-time low in Q2 2024 with an adjusted optics ratio of 13.8 percent. We expect to make improvements in our adjusted optics ratio in the future through continued strong financial discipline and are reiterating our expectation to reduce gap operating expenses to $97.5 million or below by the fourth quarter.

Jonathan: The decline was principally driven by lower revenue due to lower average daily principal balance, partially offset by higher yield and lower adjusted operating expenses.

Jonathan Coblentz: Adjusted EBITDA was exclude the impact of fair value market adjustments on our loan portfolio and notes was $30 million in the second quarter. This reflected a year-over-year increase of $16 million or 109 percent, driven by our sharply reduced cost structure and lower net charge offs on a dollar basis. Our adjusted EBITDA performance exceeded the high end of our guidance range by $13 million, primarily on lower than anticipated operating expenses. We were able to lower operating expenses by enacting the previously announced $30 million of annualized expense reductions more expediently than anticipated. Lower Chargers also contributed to our Justity with the Outperformance. Now let me discuss Q2 Credit Performance.

Jonathan Coblentz: Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes, was $30 million in the second quarter. This reflected a year-over-year increase of $16 million, or 109%, driven by our sharply reduced cost structure and lower net charge-offs on a dollar basis. Our adjusted EBITDA performance exceeded the high end of our guidance range by $13 million, primarily due to lower-than-anticipated operating expenses. We were able to lower our operating expenses by enacting the previously announced $30 million of annualized expense reductions more expediently than anticipated. Lower charge-offs also contributed to our Justin Iveda outperformance.

Jonathan: Adjusted EBITDA, which excludes the impact of fair value Mark to market adjustments on our loan portfolio and notes was $30 million in the second quarter. This reflected a year over year increase of $16 million or 109% driven by our sharply reduced cost structure and lower net charge offs on a dollar basis or a.

Raul Vazquez: And finally, we were profitable for the second consecutive quarter on an adjusted net income basis at $3.2 million and drove a significant year-over-year improvement in adjusted EBITDA. At $30 million, our adjusted EBITDA reflected 109 percent year-over-year growth. In summary, I'm proud of how the team executed in Q2 and pleased that we continue to make good progress in the 2024 business recovery. More importantly, the positive trends in credit performance and originations combined with our lower expense levels mean we are positioned to improve upon our performance in the second half, setting up a strong runway heading into 2025.

Jonathan: Adjusted EBITDA performance exceeded the high end of our guidance range by $13 million, primarily on lower than anticipated operating expenses, we were able to lower our operating expenses by enacting the previously announced $30 million of annualized expense reductions more expediently than anticipated.

Jonathan: Lower charge offs also contributed to our adjusted EBITDA outperformance.

Jonathan Coblentz: Now, let me discuss Q2 credit performance. Our annualized net charge-off rate was 12.3% as compared to 12.5% in the prior year period. I'd also note that dollar net charge-offs declined 10% year-over-year from $93 million to $84 million. Additionally, our 30-plus-day delinquency rate declined year-over-year by 30 basis points and sequentially by 28 basis points to 4.96 percent. As of the end of July, 30-plus delinquencies remain below 2023 levels.

Speaker Change: Now, let me discuss Q2 credit performance, our annualized net charge off rate was 12, 3% as compared to 12, 5% in the prior year period. I'd also note that dollar net charge offs declined 10% year over year to 93 million to $84 million.

Jonathan Coblentz: Our annualized net charge-off rate was 12.3% as compared to 12.5% in the prior year period. I'd also note that Dollar Met Chargers declined 10% year every year from 93 million to 84 million dollars. Our 30 plus state Alinquency rate declined year every year by 30 basis points and sequentially by 28 basis points. The 4.96%. As of the end of July, 30 plus delinquencies remain below 2023 levels. Our 30 plus state Alinquencies measured in dollars to climb 13% year every year from 156 million dollars to 135 million dollars. Regarding our capital and liquidity, as shown on slide 15, net cash flows from operating activities for the second quarter were a record 108 million dollars, up 5% year every year.

Raul Vazquez: Before I turn the call over to Jonathan, I want to share two additional pieces of good news.

Jonathan: Our 30, plus day delinquency rate declined year over year by 30 basis points and sequentially by 28 basis points to 496% as of the end of July 30, plus delinquencies remain below 2023 levels.

Raul Vazquez: First, I'm pleased to announce that we've signed a non-binding letter of intent to sell our credit card portfolio to a leading credit card marketer and servicer. The transaction will simplify our product portfolio and enhance our focus on our three core products. From secure personal loans, secure personal loans, and our award winning set and save savings product. We ran a competitive sales process that resulted in multiple bids and we selected the best proposal.

Jonathan Coblentz: Our 30-plus day delinquencies measured in dollars declined 13% year over year from $156 million to $135 million. Regarding our capital and liquidity, as shown on slide 15, net cash flows from operating activities for the second quarter were a record $108 million, up 5% year-over-year. As of June 30, total cash was $237 million, of which $73 million was unrestricted and $164 million was restricted.

Jonathan: Our 30, plus day delinquencies measured in dollars declined 13% year over year from $156 million to $135 million.

Jonathan: Regarding our capital and liquidity as shown on slide 15, net cash flows from operating activities for the second quarter were a record $108 million.

Jonathan: Up 5% year over year as of June 30, total cash was $237 million of which 73 million was unrestricted 164 million was restricted I'd note that these liquidity levels are after having paid down $17 million of corporate debt during the quarter.

Raul Vazquez: Based upon this proposal, we expect to sell the credit card portfolio for 70% of the receivables balance of current and less than 30 day to link with receivables as of the closing date. We are in documentation now and currently expect to close by the end of the third quarter. The initiation of the transaction triggered a $36 million unfavorable one-time fair value mark to our credit card portfolio for an approximately $26 million reduction in stockholders equity.

Jonathan Coblentz: As of June 30, total cash was 237 million dollars, of which 73 million was unrestricted and 164 million was restricted. I'd note that these liquidity levels are after having paid down $17 million of corporate debt during the quarter. Further bolstering our liquidity was $523 million in available funding capacity under our warehouse funds and remaining wholesale agreement capacity of $181 million. I'm also pleased to share that since quarter end, we signed a new warehouse agreement for $245 million to fund our unsecured and secured personal on activity into 2027. Since June of last year, Opportune has raised over $1.6 billion in diversified financings, including wholesale, securitization, and warehouse agreements from fixed income investors and banks based upon the strong performance of recent finishes and the confidence in our business model.

Jonathan Coblentz: I'd note that these liquidity levels are after having paid down $17 million of corporate debt during the quarter. Further bolstering our liquidity was $523 million in available funding capacity under our warehouse lines and remaining whole-own-sale agreement capacity of $181 million. I'm also pleased to share that since quarter end, we signed a new warehouse agreement for $245 million to fund our unsecured and secured personal loan activity into 2027. Since June of last year, Oportun has raised over $1.6 billion in diversified financings, including whole loan sales, securitizations, and warehouse agreements from fixed income investors and banks based upon the strong performance of recent finances and their confidence in our business model.

Jonathan: Further bolstering our liquidity was $523 million in available funding capacity under our warehouse lines and the remaining whole loan sale agreement capacity of $181 million.

Jonathan: I'm also pleased to share that since quarter end, we signed a new warehouse agreement for $245 million to fund our unsecured and secured personal loan activity into 2027 since June of last year opportune has raised over $1 6 billion.

Raul Vazquez: We expect the sale to have an approximately $11 million negative impact on 2024 revenue due to no longer earning revenue on the sold receivables. However, we expect the sale to be accreted by $4 million to adjust the beta this year as lower credit losses and operating expenses more than offset the loss of revenue. We expect 2025 adjustity beta favorability resulting from the credit card sale to be approximately $11 million.

Jonathan: In diversified financings, including whole loan sales securitization and warehouse agreements from fixed income investors and banks based upon the strong performance of recent vintages and their confidence in our business model.

Jonathan Coblentz: Before I move on, I want to share with you that we are making good progress in discussions involving refinancing our senior secured terminal and will provide an update when we have a final arrangement to share. Turning now to our guidance as shown on slide 17, our outlook for the second quarter is total revenue of 248 to 252 million dollars. Annualized net charge off rate of 12.3% plus or minus 15 basis points, adjusted the bidah of $23 to $26 million. I'd note that the own portfolio is projected to decline in Q3 by 10% year over year.

Jonathan Coblentz: Before I move on, I want to share with you that we are making good progress in discussions involving refinancing our senior secured term loan, and we'll provide an update when we have a final arrangement to share. Turning now to our guidance, as shown on slide 17, our outlook for the second quarter is total revenue of $248 to $252 million. Annualized net charge-off rate of 12.3%, plus or minus 15 basis points, adjust the Vida of 23 to 26 million dollars. I'd note that the own portfolio is projected to decline in Q3 by 10% year-over-year.

Jonathan: I move on I want to share with you that we are making good progress in discussions involving refinancing our senior secured term loan and will provide an update when we have a final arrangement to share.

Raul Vazquez: Second, I'm excited to share the details of our new lending collaboration with Western Union, a leader in cross-border money transfers with 90% global brand recognition. Under the agreement, we have the potential to reach their millions of customers who are similar to our own. Structured like our other lending is the service agreements, it only requires us to pay for leads when alone that has met our underwriting criteria has been funded. This is a significant opportunity to add new applicants to our originations funnel and generate incremental new loan volume under our current credit standards.

Jonathan: Turning now to our guidance as shown on slide 17, our outlook for the second quarter is total revenue of $248 million to $252 million.

Jonathan: Annualized net charge off rate of 12, 3% plus or minus 15 basis points, adjusted EBITDA of $23 million to $26 million.

Jonathan: I would note that the owned portfolio is projected to decline in Q3 by 10% year over year as you can see on slide 18, where our loan portfolio to remain flat or to grow by 10% year over year. During <unk> 24, our expectations for annualized net charge off rate would be 120 basis points.

Jonathan Coblentz: With that, I will turn it over to Jonathan for additional details on our second quarter financial performance as well as our third quarter and full year guidance. Jonathan will also discuss how this translates to progress towards our long-term, unique economic objectives.

Jonathan Coblentz: As you can see on slide 18, where our loan portfolio to remain flat or to grow by 10% year over year during 3224. Our expectations for annualized net charge-off rate would be 120 basis points and 220 basis points lower, respectively. Our Q3 adjusted EBITDA guidance at the midpoint reflects almost 70% year-over-year growth. Our Q3 adjusted EBITDA guidance is down from Q2 due to anticipated higher interest expense and a seasonal increase in marketing expense. It's also worth noting that our Q2 adjusted EBITDA benefits from our completing operating expense reductions sooner than planned in the quarter. Our guidance for the full year is total revenue of $995 million to $1.01 billion, annualized net charge-off rate of 12.1% plus or minus 30 basis points, adjusted EBITDA of $84 to $92 million.

Jonathan Coblentz: As you can see on slide 18, were our loan portfolio to remain flat or to grow by 10% year-over-year during 3Q24, our expectations for annualized net charge-off rates would be 120 basis points and 220 basis points lower, respectively. Additionally, our Q3 Adjusted EBITDA guidance at the midpoint reflects almost 70% year-over-year growth. Our Q3 Adjusted EBITDA guidance is down from Q2 due to anticipated higher interest expense and a seasonal increase in marketing.

Jonathan: And 220 basis points lower respectively.

Jonathan Coblentz: Thanks Raoul, and good afternoon everyone. As Raoul mentioned, we had a strong second quarter and our position to improve upon our performance in the second half of the year. The anticipated sale of the credit card portfolio and exciting new lending as a service collaboration with Western Union are integral milestones towards focusing to business on our core products for the reducing our expense base and growing profitably over the long term. As shown on flight six, opportune delivered total revenue of $250 million and we were profitable on an adjusted basis for the second consecutive quarter with adjusted net income of $3.2 million for adjusted EPS of 8 cents.

Jonathan: Our Q3, adjusted EBITDA guidance at the midpoint reflects almost 70% year over year growth.

Jonathan: Q3, adjusted EBITDA guidance is down from Q2 due to anticipated higher interest expense and a seasonal increase in marketing expense. It's also worth noting that our Q2 adjusted EBITDA benefited from our completing operating expense reductions sooner than planned in the quarter.

Jonathan Coblentz: It's also worth noting that our Q2 Adjustees benefited from our completing operating expense reductions sooner than planned in the quarter. Our guidance for the full year is total revenue of $995 million to $1.01 billion, and an annualized net charge-off rate of 12.1% plus or minus 30 basis points. I just need a DA of $84 to $92 million.

Jonathan: Our guidance for the full year is total revenue of $995 million to $1.01 billion.

Jonathan: Annualized net charge off rate of 12, 1% plus or minus 30 basis points, adjusted EBITDA of $84 million to $92 million.

Jonathan Coblentz: Continuing to operate under conservative credit posture, originations of $435 million were down 10% year over year. Sequentially, originations were up 29% aligning with the typical seasonal pattern for growth after the first quarter. Total revenue of $250 million to climb by 6%, driven by an 8% to climb our average daily principal balance under our conservative credit posture, partially offset by price increases as portfolio yield increased 167 basis points year-over-year, improving to 33.9%.

Jonathan Coblentz: While this revised for your guidance reflects total revenue and adjusted EBITDA upless of $5 million and $3 million respectively at the midpoints, it also reflects expectations for our annualized net charge off rate to be 20 basis points higher than our prior guidance at the midpoint, which represents approximately $5 million additional charge, also in the second half of the year, largely driven by the performance of our backbook. I'm pleased that we are able to increase our full year revenue guidance driven by our yield enhancements and commitment to identifying high quality originations despite the expected $11 million negative revenue impact from selling the credit card portfolio.

Jonathan Coblentz: While this revised full-year guidance reflects total revenue and Adjusted EBITDA uplifts of $5 million and $3 million, respectively, at the midpoints, it also reflects expectations for our annualized net charge-off rate to be 20 basis points higher than our prior guidance at the midpoint, which represents approximately $5 million of additional charge-offs in the second half of the year, largely driven by the performance of our backbone. I'm pleased that we are able to increase our full-year revenue guidance driven by our yield enhancements and commitment to identifying high-quality originations despite the expected $11 million negative revenue impact from selling the credit card portfolio.

Jonathan: While this revised full year guidance reflects total revenue and adjusted EBITDA uplifts of $5 million and $3 million respectively. At the midpoint. It also reflects expectations for our annualized net charge off rate to be 20 basis points higher than our prior guidance at the midpoint, which represents approximately $5 million of additional charge offs.

Jonathan: In the second half of the year, largely driven by the performance of our backlog.

Jonathan: I am pleased that we are able to increase our full year revenue guidance, driven by our yield enhancements and commitment to identifying high quality originations. Despite the expected $11 million negative revenue impact from selling the credit card portfolio.

Jonathan Coblentz: Net revenue was $60 million down 49% year-over-year, primarily due to the one-time $36 million unfavorable fair value mark to our credit card portfolio that Raul mentioned, along with the total revenue decline in higher interest expense. Our total net decrease in fair value of $136 million was primarily driven by current to elaborate on the impact of selling the credit card portfolio, the agreed upon price at 70% of the receivables being sold reflects the highest offer that we received as part of our strategic review process, thus setting the new fair value mark.

Jonathan Coblentz: Creating a strong runaway into 2025, our adjusted EBITDA guidance at the midpoint also implies that our second half will be over 70% higher than our first half, and we expect to generate markedly higher adjustment in the second half as well.

Jonathan Coblentz: Creating a strong runway into 2025, our adjusted EBITDA guidance at the midpoint also implies that our second half will be over 70% higher than our first half, and we expect to generate markedly higher adjusted net income in the second half as well. Before handing the call back to Raul to close, I'd like to update you on our progress towards what we believe long-term investor returns for Oportun could look like. While our long-term targets are gap targets, I'll be using adjusted metrics for comparison since they remove non-recurring items and provide a better sense of our future run rate.

Jonathan: Creating a strong runway into 2025, our adjusted EBITDA guidance at the midpoint also implies that our second half will be over 70% higher than our first half and we expect to generate markedly higher adjusted net income in the second half as well.

Jonathan: Before handing the call back to Ralph to close I'd like to update you on our progress towards what we believe long term faster returns for opportune could look like while our long term targets are GAAP targets I'll be using adjusted metrics. Your comparison since they remove nonrecurring items and provide a better sense of our future run rate.

Jonathan Coblentz: Before we believe, long-term investor returns for opportune could look like. While our long-term targets are gap targets, I'll be using adjusted metrics for comparison since they remove non-recurring items and provide a better sense of our future run rate. As a reminder, our personal loan business has a 32% average APR. Even while we deliver value to our borrowing members, that we believe is better than alternatives. When non-interest income is added, primarily from our savings product, we see a 36% total revenue yield target as a percentage of own principal amounts to be sustainable. As of Q2, we are already at our total revenue yield target.

Jonathan Coblentz: As a reminder, our personal loan business has a 32% average APR even while we deliver value to our borrowing members that we believe is better than alternatives. When non-interest income is added, primarily from our savings product, we see a 36% total revenue yield target as a percentage of owned principal balance to be sustained. As of Q2, we are already at our total revenue yield target.

Ralph: As a reminder, our personal loan business has a 32% average APR, even while we deliver value to our borrowing members that we believe is better than alternatives. When noninterest income has added primarily from our savings product, we see at 36% total revenue yield target as a percentage of owned principal balance to be sustainable.

Jonathan Coblentz: Interest expense at $54 million was up $13 million year-over-year, this was primarily driven by increased debt outstanding and an increase in our cost of debt to 7.7% versus 5.6% in the year-ago period reflecting the higher rate environment. Turning now to operating expenses and efficiency, we continue to see the benefit of our cost reduction initiatives. Our $109 million until the operating expenses in Q2 reflected 20% decreased from the prior year period, while including a $6 million impairment of the right-of-use asset for our Bay Area headquarters and $2 million in workforce optimization expenses relating to the reduction in workforce we enacted in the second half of May.

Jonathan: As of Q2, we are already at our total revenue yield target.

Jonathan Coblentz: In our unit economic model, we are targeting an 8% cost of funds and a 9 to 11% annualized net charge-off rate to generate a 17 to 19% risk-adjusted yield. For Q2, we did report 8% cost of funds, but our charge-off rate of 12% was above the target range, impacted by our average daily principal balance declining 8% year-over-year under our conservative credit posture. However, I want to remind you again that if you remove the backbook from our Q2 performance, the annualized net charge-off rate for the frontbook was 10.6%, already within our long-term target range. Lastly, our 14% risk-adjusted yield for Q2, 24, also included 2% of unfavorable non-cash fare value marks.

Jonathan Coblentz: In our unit economics model, we are targeting an 8% cost of funds and a 9-11% annualized net charge-off rate to generate a 17-19% risk-adjusted yield. For Q2, we did report an 8% cost of funds, but our charge-off rate of 12% was above the target range, impacted by our average daily principal balance declining 8% year-over-year under our conservative credit posture. However, I want to remind you again that if you remove the back book from our Q2 performance, the annualized net charge-off rate for the front book was 10.6 percent, already within our long-term target range. Lastly, our 14 percent risk-adjusted yield for Q2-24 also included 2 percent of unfavorable non-cash fare value-added.

Jonathan: And our unit economics model, we are targeting an 8% cost of funds and a 9% to 11% annualized net charge off rate to generate of 17% to 19% risk adjusted yield for.

Jonathan: For Q2, we did report 8% cost of funds, but our charge off rate of 12% was above the target range impacted by our average daily principal balance declining 8% year over year under our conservative credit posture.

Jonathan Coblentz: We will continue to drive our cost structure lower in the second half of 2024 and remain on track to achieve $97.5 million in Q4 gap operating expenses. In the second quarter, our sales and marketing expenses were just over $16 million down 15% year-over-year, and I'm pleased to share that our CAC of $122 was a new low for us as a public company down 25% year-over-year driven by our cost discipline. For the quarter, we recorded a just net income of $3 million compared to $6 million in the prior year quarter and adjusted the EPS of 8 cents versus 17 cents.

Jonathan: However, I want to remind you again that if you remove the back book from our Q2 performance the annualized net charge off rate for the front book was 10, 6% already within our long term target range Lastly, our 14% risk adjusted yield for <unk> 24 also included 2% of unfavorable.

Jonathan: Noncash fair value marks finally, assuming target operating expenses over the long term of 12, 5% while in principle balance we see a 3% to 4% return on assets is attainable in Q2, we made progress towards this target by delivering a 13, 8% adjusted operating expense ratio.

Jonathan Coblentz: Finally, assuming target operating expenses over the long-term of 12.5% loan principal balance, we see a 3 to 4% return on assets as attainable. In Q2, we made progress towards this target by delivering a 13.8% adjusted operating expense ratio while guiding to further cost reductions in the second half of the year. In summary, our adjusted ROE for Q2, 24 was 4% in comparison to our 20-28% long-term target. On slide 20, you can see the three key drivers we've identified to grow a Jessurun, are we from 4% to our 20 to 28% long-term target? First, we're seeking to reduce our annualized net charge-off rate from 12% to 9 to 11% and expect to do so by eliminating our backbook, driving ongoing performance improvements from the roll-out of our V12 credit model, and prudently growing our own portfolio by 10 to 15% every time.

Jonathan Coblentz: Finally, assuming target operating expenses over the long term of 12.5%, loan principle balanced, we see a 3-4% return on assets is attained. In Q2, we made progress towards this target by delivering a 13.8% adjusted operating expense ratio while guiding to further cost reductions in the second half of the year. In summary, our adjusted ROE for 2Q24 was 4% in comparison to our 2028 long-term target. On slide 20, you can see the three key drivers we've identified to grow Adjusted ROE from 4% to our 20% to 28% long-term target.

Jonathan Coblentz: The decline was principally driven by lower revenue due to the lower average debted principal balance partially offset by higher yield and lower adjusted operating expenses. Adjusted EBITDA was exclude the impact of fair value market adjustments on our loan portfolio and notes was $30 million in the second quarter. This reflected a year-over-year increase of $16 million or 109 percent driven by our sharply reduced cost structure and lower net charge offs on a dollar basis.

Jonathan: Guiding to further cost reductions in the second half of the year.

Jonathan: In summary, our adjusted ROE for.

Jonathan: <unk> 24 was 4% in comparison to our 2028% long term target.

Jonathan: On Slide 20, you can see the three key drivers we've identified to grow adjusted ROE from 4% to 20% to 28% long term target first we're seeking to reduce our annualized net charge off rate from 12% to 9% to 11% and expect to do so by eliminating our back book driving ongoing.

Jonathan Coblentz: First, we're seeking to reduce our annualized net charge-off rate from 12% to 9% to 11% and expect to do so by eliminating our backbook, driving ongoing performance improvements from the rollout of our V12 credit model, and prudently growing our loan portfolio by 10% to 15% over time. Second, we're seeking to reduce our adjusted operating expenses as an annualized percentage of our owned principal balance from 13.8% to 12.5%. We're on our way to attaining that by achieving our $97.5 million gap operating expense target for 4Q, maintaining cost discipline with our simplified product portfolio into 2025 and beyond, and also benefiting from the tailwind of conservative portfolio growth and resulting scale.

Jonathan Coblentz: Our adjusted EBITDA performance exceeded the high end of our guidance range by $13 million primarily on lower than anticipated operating expenses. We were able to lower operating expenses by enacting the previously announced $30 million of annualized expense reductions more expediently than anticipated.

Jonathan: <unk> performance improvements from the rollout of our <unk> 12 credit model and prudently growing our loan portfolio by 10% to 15% overtime.

Jonathan Coblentz: Second, we're seeking to reduce our adjusted operating expenses as an annualized percentage of our own principal balance from 13.8% to 12.5%. We're on our way to attaining that by achieving our $97.5 million gap operating expense target with 4Q, maintaining cost discipline with our simplified product portfolio into 2025 and beyond, and also benefiting from the tail end of conservative portfolio growth and resulting scale. And third, we're seeking to reduce our debt to equity leverage ratio from 7.9 to 1 to 6 to 1. We expect to do so by continuing to allocate our free cash flow towards debt repayment, as we have in recent quarters, including our expected repayment of $38 million remaining on our corporate financing facility secured by our securitization residuals before the end of January.

Jonathan: Second we're seeking to reduce our adjusted operating expenses as an annualized percentage of AUM principal balance from 13, 8% to 12, 5%. We're on our way to attaining that by achieving a $97 $5 million GAAP operating expense target with <unk>, maintaining cost discipline with our simplified product.

Jonathan Coblentz: Lower Chargers also contributed to our Justity with the Outperformance Now let me discuss Q2 Credit Performance. Our annualized net charge off rate was 12.3% as compared to 12.5% in the prior year period. I'd also note that Dollar Met Chargers declined 10% year every year from 93 million to 84 million dollars. Our 30 plus state Alinquency rate declined year every year by 30 basis points and sequentially by 28 basis points. The 4.96%.

Jonathan: Portfolio into 2025, and beyond and also benefiting from the tailwind of conservative portfolio growth and resulting scale.

Jonathan Coblentz: And third, we're seeking to reduce our debt to equity leverage ratio from 7.9 to 1 to 6 to 1. We expect to do so by continuing to allocate our free cash flow towards debt repayment as we have in recent quarters, including our expected repayment of the $38 million remaining on our corporate financing facility secured by our securitization residuals before the end of January. We also expect to increase our stockholders' equity by returning to and maintaining GAAP profitability. I'm confident in our ability to make progress towards our 20% to 28% ROE target over the next several years by executing on these key drivers. Raul, I'll turn it over to you.

Jonathan: And third we're seeking to reduce our debt to equity leverage ratio from $7 91 to six to one we expect to do so by continuing to allocate our free cash flow towards debt repayment as we have in recent quarters, including our expected repayment of $38 million remaining on our corporate financing facility secured by our securitization.

Jonathan Coblentz: As of the end of July, 30 plus delinquencies remain below 2023 levels. Our 30 plus state Alinquencies measured in dollars to climb 13% year every year from 156 million dollars to 135 million dollars. Regarding our capital and liquidity, as shown on slide 15, net cash flows from operating activities for the second quarter were a record 108 million dollars up 5% year every year. As of June 30 total cash was 237 million dollars of which 73 million was unrestricted and 164 million was restricted.

Jonathan: <unk> residuals before the end of January.

Jonathan Coblentz: We also expect to increase our stockholders' equity by returning to and maintaining GAAP profitability. I am confident in our ability to make progress towards our 20 to 28% early target over the next several years by executing on these key drivers.

Jonathan: We also expect to increase our stockholders' equity by returning to maintaining GAAP profitability.

Raul: I am confident in our ability to make progress towards our 20% to 28% ROE target over the next several years by executing on these key drivers Raul back over to you. Thanks, Jonathan to close I'd like to emphasize three points.

Raul Vazquez: Raoul, back over to you. Thanks, Jonathan.

Raul Vazquez: Thanks, Jonathan. To close, I'd like to emphasize three points. First, we're pleased with our second quarter performance and our momentum going into the second half, where we expect to generate adjusted EBITDA levels that are over 70% higher than the first half and to be markedly more profitable on an adjusted net income basis. Second, we further focused our business on our core competencies by agreeing to an LOI to sell our credit card portfolio, which enables us to focus on our three core products, and by forming a new lending collaboration with West, Third, we've made strong progress towards our long-term profitability targets by improving credit outcomes, as evidenced by our front book generating a loss rate of 10.6%, which is already within our target 9% to 11% range, and by reducing operating expenses a percentage of our own principal.

Jonathan Coblentz: I'd note that these liquidity levels are after having paid down $17 million of corporate debt during the quarter. Further bolstering our liquidity was $523 million in available funding capacity under our warehouse funds and remaining wholesale agreement capacity of $181 million. I'm also pleased to share that since quarter end we signed a new warehouse agreement for $245 million to fund our unsecured and secured personal on activity into 2027. Since June of last year, opportune has raised over $1.6 billion in diversified financings including wholesale, securitization and warehouse agreements from fixed income investors and banks based upon the strong performance of recent finishes and the confidence in our business model.

Raul Vazquez: To close, I'd like to emphasize three points. First, we're pleased with our second quarter performance and our momentum going into the second half, where we expect to generate adjusted EBITDA levels that are over 70% higher than the first half and to be markedly more profitable on an adjusted net income basis. Second, we further focused our business on our core competencies by agreeing to an LOI to sell our credit card portfolio, which enables us to focus on our three core products and by forming a new lending collaboration with Western Union. Third, we've made strong progress towards our long-term profitability targets by improving credit outcomes, as evidenced by our front book generating a loss rate of 10.6%, which is already within our target 9 to 11% range, and by reducing operating expenses as a percentage of our own principle bounds.

Raul: First we're pleased with our second quarter performance and our momentum going into the second half, where we expect to generate adjusted EBITDA levels that are over 70% higher than the first half and to be markedly more profitable on an adjusted net income basis.

Speaker Change: Second we further focused our business on our core competencies by agreeing to an LOI to sell our credit card portfolio, which enables us to focus on our three core products and by forming a new lending collaboration with Western Union.

Raul: Third we've made strong progress towards our long term profitability targets by improving credit outcomes as evidenced by our front book generating a loss rate of 10, 6%, which is already within our target, 9% to 11% range and by reducing operating expense as a percentage of our own principal balance.

Operator: To wrap up, I want to thank the Opportune team for their solid execution in Q2 and their ongoing commitment to our mission of empowering members to build a better future. With that, operator, let's open up the line for questions. Thank you.

Raul Vazquez: To wrap up, I want to thank the Opportun team for their solid execution in Q2 and their ongoing commitment to our mission of empowering members to build a better society. With that, Operator, let's open up the line for questions.

Speaker Change: To wrap up I want to thank the opportunity for their solid execution in Q2 and their ongoing commitment to our mission of empowering members to build a better future.

Speaker Change: With that operator, let's open up the line for questions.

Speaker Change: Thank you.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question today, please press star one on your telephone keypad and a confirmation tone to indicate your line is in the question Q. You may press star two if you'd like to withdraw your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, we'll be poll for questions. Thank you.

Operator: At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: At this time, we'll be conducting a question and answer session.

Speaker Change: If you'd like to ask a question today. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Raul: You May press star two if you'd like to withdraw your question from the queue.

Jonathan Coblentz: I'd note that the own portfolio is projected to decline in Q3 by 10% year over year. As you can see on slide 18, where our loan portfolio to remain flat or to grow by 10% year over year during 3224. Our expectations for annualized net charge off rate would be 120 basis points and 220 basis points lower respectively. Our Q3 adjusted EBITDA guidance at the midpoint reflects almost 70% year over year growth.

Raul: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Thank you. Thank you. Our first question is from the line of John Hecht with Jeffries. Please proceed with your questions.

Speaker Change: One of them. Please when we poll for questions. Thank you.

John Hecht: Our first question is from the line of John Hecht with Jeffries. Please see you too. Hey guys, thanks very much for taking my questions, and I appreciate all the information updates. Congratulations on some of the turning trends in the previous years.

Speaker Change: Thank you. Our first question is from the line of John Hecht with Jefferies. Please proceed with your question.

John Hecht: Hey guys, thanks very much for taking my questions and I appreciate all the information update and congratulations on some of the turning trends. It's good to hear. First question, and Jonathan, I think you might have... Noted this, but I just want to clarify that there's a $10.1 million other non-deferring expense. Is that tied to the office expense or the workforce expense, or is there something else that goes back?

John Hecht: Hey, guys. Thanks, very much for taking my questions and I appreciate all the information update and congratulations on some.

Speaker Change: Some of the turn in trends.

Speaker Change: That's good to hear.

Jonathan Coblentz: First question, Jonathan, I think you might have noted this, but I just want to clarify that through the $10.1 million other non-liberating expenses, I, for the office expense or the workforce expense, there's just something else that's real bad. Sure, so the non-recurring expenses for the second quarter, John, it was $6 million related to the write down at the right of use asset for our headquarters in San Carlos, and it was $2 million for severance for the workforce optimization that we announced at our prior earnings call. So that's a total of $8 million. Okay, that's helpful.

Jonathan Coblentz: Our Q3 adjusted EBITDA guidance is down from Q2 due to anticipated higher interest expense and a seasonal increase in marketing expense. It's also worth noting that our Q2 adjusted EBITDA benefits from our completing operating expense reductions sooner than planned in the quarter. Our guidance for the full year is total revenue of $995 million to $1.01 billion, annualized net charge off rate of 12.1% plus or minus 30 basis points, adjusted EBITDA of $84 to $92 million.

Speaker Change: First question.

Speaker Change: Jonathan I think you might have.

Speaker Change: Noted this but I just want to clarify that.

Speaker Change: And $1 million other nonrecurring expenses.

Speaker Change: For the office.

Speaker Change: Third of workforce expense through is there something else.

Jonathan Coblentz: Sure. So the non-recurring expenses for the second quarter, John, were $6 million related to the write-down of the right-of-use asset for our headquarters in San Carlos, and it was $2 million for severance related to the workforce optimization that we announced on our prior earnings call. So that's a total of $8 million.

Speaker Change: Sure.

Speaker Change: The nonrecurring expenses for the second quarter, John It was $6 million.

John: Related to the.

John: The write down of the right of use asset for our headquarters in.

John: In San Carlos and it was $2 million for severance for the workforce optimization that we announced at our prior earnings call. So thats, a total of $8 million.

John Hecht: Okay, that's helpful. And then, you know, with respect to Western Union, I know you guys said we arranged some other arrangements, but maybe talk about the ramp period and whether the ramp is going to be kind of over a period of time and involve different geographies or how you think about that.

John: Okay.

Speaker Change: Helpful and then.

John: Respectively.

Speaker Change: Western Union.

Speaker Change: I know you guys said the arrangement.

Speaker Change: The other arrangements, but maybe talk about the ramp period.

Speaker Change: <unk>.

Speaker Change: The ramp the ramp is going to be.

Speaker Change: Sure.

Speaker Change: Yes.

John: For a period of time into different geographies or how should we think about that.

Raul Vazquez: Yeah, John, this is Raul. Thanks for the question. So, first, as you can imagine, we're very excited about this collaboration with Western Union. We think it really validates our underwriting abilities, in particular for the other members that we serve, people that don't have a lot of experience with credit, maybe are new to credit. So we're really proud of the fact that Western Union ran an RFP process and we were selected. In terms of the grant period, it's very early in this collaboration.

Raul Vazquez: Yeah, John, this is Raul. Thanks for the question. So first, as you can imagine, we're very excited about this collaboration with Western Union. We think it really validates our underwriting abilities, in particular, for the other members that we serve, people that don't have a lot of experience with credit, maybe are new to credit. So we're really proud of the fact that Western Union ran an RFP process, and we were selected.

Rob: Yes, John this is Rob thanks for the question. So first as you can imagine we're very excited about this collaboration with Western Union and we think it really validates our underwriting abilities in particular for the other members that we serve people. They don't have a lot of experience with credit maybe are new to credit.

Jonathan Coblentz: Creating a strong runaway into 2025 are adjusted EBITDA guidance at the midpoint also implies that our second half will be over 70% higher than our first half, and we expect to generate markedly higher adjustment in the second half as well.

John: So we're really proud of the fact that Western Union ran an RFP process and we were selected in terms of the ramp period. It's very early in this collaboration we are still planning the rollout. So I think what we'd prefer to do is come back in subsequent quarters. Once we're in market and have a sense of how things are going to go but again, it's something we're very excited about.

Raul Vazquez: In terms of ramp period, it's very early in this collaboration; we're still planning the rollout, so I think what we prefer to do is come back in subsequent quarters once we're in market and have a sense of how things are going to go. But again, it's something we're very excited about.

Jonathan Coblentz: Before we believe long-term investor returns for opportune could look like. While our long-term targets are gap targets, I'll be using adjusted metrics for comparison since they remove non-recurring items and provide a better sense of our future run rate. As a reminder, our personal loan business has a 32% average APR, even while we deliver value to our borrowing members, that we believe is better than alternatives. When non-interest income is added, primarily from our savings product, we see a 36% total revenue yield target as a percentage of own principal amounts to be sustainable.

Raul Vazquez: We're still planning the rollout, so I think what we prefer to do is come back in subsequent quarters once we're in the market and have a sense of how things are going to go. But again, it's something we're very excited about.

John Hecht: And then maybe this final question would be like, can you give us an update on your partnerships that you've been building out over time, like the MetaBank partnership and the retail partnership. Maybe you could give us an update on how those are doing and maybe kind of the mix of what's being originated on the internet versus the partners versus the branching?

John Hecht: And then, maybe this plan of question would be like, can you give us like, you know, you had a lot of partnerships that you've been building out all the time, like the Medevank partnership, and we failed with the partnership.

John: And then maybe.

Speaker Change: Final question would be when you gave us.

Speaker Change: You had a lot of partnerships that you've been building out all the time like the Medibank partnership and retail partnership.

Raul Vazquez: Maybe could you give us an update on how those are doing and maybe kind of the mix of what's being originated on the Internet versus the partners versus the branches? Yes, so John, on the Medevank partnership, that's a partnership that we think has gone very, very well. So the bulk of our originations now are through password. We think that they've really been a fantastic partner for us. In terms of how we go to market, how we're able to serve customers together, so it's something that we're very, very pleased with.

Speaker Change: Maybe you could just give us an update on how those are doing and.

Speaker Change: Maybe kind of a mix of what's being originated on the internet versus the partner versus the banking.

Jonathan Coblentz: As of Q2, we are already at our total revenue yield target. In our unit economic model, we are targeting an 8% cost of funds and a 9 to 11% annualized net charge off rate to generate a 17 to 19% risk adjusted yield. For Q2, we did report 8% cost of funds, but our charge off rate of 12% was above the target range, impacted by our average daily principal balance declining 8% year-over-year under our conservative credit posture.

Raul Vazquez: Yes, so, John, on the MetaBank partnership, that's a partnership that we think has gone very, very well. So the bulk of our originations now are through PathWord. We think that they've really been a fantastic partner for us in terms of how we go to market, how we're able to serve customers together. So it's something that we're very, very pleased with.

Speaker Change: Yes, so John on the Meadowbank partnership that's a partnership standpoint, we think it's gone very very well so.

Speaker Change: Bulk of our originations now where through password, we think that they really been a fantastic partner for us.

Speaker Change: In terms of how we go to market, how we're able to serve customers together. So it's something that we're very very pleased with and then in terms of the channel what I would do is for all investors not just in terms of the question, you're asking I would point them to our investor presentation.

Raul Vazquez: And then in terms of the channels, what I would do is, for all investors, not just in terms of the question you're asking, I would point them to our investor presentation. The most recent one is March 2024. That's when we published the channel mix. And what you see there is that about 36% of loans come from the retail channel, and that includes our lending as a service partnerships. 38% are from the contact center, and then 26% are mobile and digital.

Raul Vazquez: And then, in terms of the channel, what I would do is for all investors, in terms of the question you're asking, I would point them to our investor presentation. The most recent one is March 2024. That's one where we've published the channel mix, and what you see there is about 36% of loans come from the retail channel, and that includes our Lending as a Service. Partnerships; 38% are from the contact center, and then 26% are mobile and digital. That's as of Q1, so we have an update of that for Q2. Usually, what we do is we update these investor presentations after the conclusion of the quarter, so we'll update these statistics with the most recent numbers, John.

Jonathan Coblentz: However, I want to remind you again that if you remove the backbook from our Q2 performance, the annualized net charge off rate for the frontbook was 10.6% already within our long-term target range. Lastly, our 14% risk adjusted yield for Q2, 24, also included 2% of unfavorable non-cash fare value marks. Finally, assuming target operating expenses over the long-term of 12.5% loan principal balance, we see a 3 to 4% return on assets as attainable.

Speaker Change: We the most recent one is March 2024 that is one where we published the channel mix and what you see there is about 36%.

Speaker Change: Loans come from.

Speaker Change: The retail channel and that includes our lending as a service partnerships, 38% are from the contact center, and then 26% our mobile and digital and Thats as of Q1. So we haven't updated that for Q2, usually what we do is we update these investor presentations. After the conclusion of the quarter. So we will update these.

Raul Vazquez: That's as of Q1, so we haven't updated that for Q2. Usually, we update these investor presentations after the conclusion of the quarter, so we'll update these statistics with the most recent numbers, John. But the other thing that we're very pleased with is on that page, investors will see that when we look at all of 2023, about half of our applicants used more than one channel during their application process, and three-quarters used our mobile and digital channels as part of their application, even if they initiated it in retail or in the contact center.

Jonathan Coblentz: In Q2, we made progress towards this target by delivering a 13.8% adjusted operating expense ratio while guiding to further cost reductions in the second half of the year. In summary, our adjusted ROE for Q2, 24 was 4% in comparison to our 20-28% long-term target.

Speaker Change: Statistics with the most recent numbers John but the other thing that we're very pleased with is on that page investors will see that when we look at all of 2023 about half of our applicants used more than one channel during their application process and three quarters used our mobile and digital channels as part of their application even.

Raul Vazquez: But the other thing that we're very pleased with is, on that page, investors will see that when we look at all of 2023, about half of our applicants used more than one channel during their application process, and three quarters used our mobile and digital channels as part of their application, even if they initiated in retail or in the contact center.

Jonathan Coblentz: On slide 20, you can see the three key drivers we've identified to grow a Jessurun, are we from 4% to our 20 to 28% long-term target? First, we're seeking to reduce our annualized net charge off rate from 12% to 9 to 11% and expect to do so by eliminating our backbook, driving ongoing performance improvements from the roll-out of our V12 credit model, and prudently growing our own portfolio by 10 to 15% every time.

Speaker Change: And if they initiated and retailer in the contact center.

John Hecht: Okay, that's very good information. Thank you guys very much.

John Hecht: Okay Thats very good information. Thank you guys very much.

Operator: Thank you for the question, John.

Operator: Thank you for the questions, John. Thank you, John.

John Hecht: Thank you for the question John Thank you John.

Operator: Thank you, John.

Halgit: Our next questions are from the line of Halgit with Be Rylei Securities. Please just see with your questions. Hey guys, great progress here. You know, on the list of all the finances you've done over the last several months, has there been any change in trajectory of the cost of capital, or has it been relatively consistent in what you're feeling about how it might be right for cut, you know, over time? It should offer things.

Operator: Our next questions are from the line of Hal Goetsch with B Riley Securities. Please proceed with your questions.

Speaker Change: Our next questions are from the line of <unk> with B Riley Securities. Please proceed with your questions.

Hal Goetsch: Hey guys, great progress here. On the list of all the finances you've done over the last several months, has there been any change in the trajectory of the cost of capital, or has it been relatively consistent, and what are your feelings about how it might be? Yeah, wait for the cut, you know, over time, give us your thoughts, I think.

<unk>: Hey, guys great progress here on.

Speaker Change: On the list of all the financing you've done over the last several months is there has there been any change in trajectory of the cost of capital or has it been relatively consistent and what's your what's your feelings about how it might be.

Speaker Change: If rates were cut over time, it's your thoughts there. Thanks.

Jonathan Coblentz: Thanks, Hal. The cost of capital has improved. We talked about this back in our Q4 earnings call that we had just completed our February securitization of $200 million, which was over 10 times over-subscribed, and it actually priced 160 basis points better than our QE of a similar size just in October. So certainly, that's been a very favorable trajectory, and right now, we're continuing to see the market as very strong, and so we certainly plan to do future ABS deals, and we're optimistic about where pricing for those could come in.

Jonathan Coblentz: Thanks, Hal. The cost of capital has improved. So for, we talked about this back in our Q4 earnings call that we had just completed our February securitization of 200 million, which was over 10 times oversubscribed. And it actually priced 160 basis points better than the similar size just in October. So certainly, that's been a very favorable trajectory. And right now we're continuing to see the market to be very strong. And so we certainly plan to do future ABS deals. And we're optimistic about where pricing for those could come in.

Hal: Thanks, Hal the cost of capital has improved so we talked about this.

Hal: Back in our Q4 earnings call.

Speaker Change: We had just completed our February securitization of $200 million, which was over 10 times oversubscribed.

Speaker Change: And it actually priced a 160 basis points better than our.

Jonathan Coblentz: We expect to do so by continuing to allocate our free cash flow towards debt repayment as we have in recent quarters, including our expected repayment of $38 million remaining on our corporate financing facility secured by our securitization residuals before the end of January. We also expect to increase our stockholders' equity by returning to and maintaining gap profitability. I am confident in our ability to make progress towards our 20 to 28% early target over the next several years by executing on these key drivers.

Hal: Thank you.

Speaker Change: A similar size just in October.

Speaker Change: Certainly not.

Speaker Change: Favorable trajectory.

Speaker Change: And right now.

Speaker Change: We're continuing to see the market to be very strong.

Speaker Change: And so we certainly plan to do future ABS deals.

Speaker Change: And we're optimistic about where pricing for those could come in.

Jonathan Coblentz: Additionally, you talked about the potential for Fed rate cuts. While 80% or so of our debt is fixed rate, Fed rate cuts won't have an immediate impact, but over time, as we come to market with new term financings, we'll get the benefit of the lower benchmark treasury rates.

Jonathan Coblentz: Additionally, you talked about the potential for Fed rate cuts. While 80 percent or so of our debt is fixed rate, Fed rate cuts won't have an immediate impact. But over time, as we come to market with new term financings, we'll get the benefit of lower benchmark Treasury rates.

Speaker Change: Additionally, you talked about the potential for fed rate cuts.

Speaker Change: While 80% or so of our debt is fixed rate.

Speaker Change: Fed rate cuts won't have an immediate impact but over time as we come to market with new term financings will get the benefit of the lower benchmark treasury rates.

Raul Vazquez: Raoul, back over to you. Thanks, Jonathan.

Raul Vazquez: Third, we've made strong progress towards our long-term profitability targets by improving credit outcomes as evidenced by our front book generating a loss rate of 10.6%, which is already within our target 9 to 11% range and by reducing operating expenses a percentage of our own principle bounds.

Halgit: Okay, thank you, John. Thank you.

Hal Goetsch: Terrific. Thank you, Jonathan.

Speaker Change: Terrific. Thank you gentlemen.

Operator: Thank you. At this time, we've reached the end of the question and answer session, and I'll turn the call back over to management for closing remarks.

Speaker Change: Thank you at this time, we've reached the end of the question and answer session and I will turn the call back over to management for closing remarks.

Operator: At this time, we've reached the end of the question-and-answer session.

Operator: And I'll turn the call back over to management for closing remarks. Thank you again for joining us on today's call. And we look forward to speaking with you again soon.

Raul Vazquez: Thank you again for joining us on today's call, and we look forward to speaking with you again soon. And this will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Speaker Change: Thank you again for joining us on today's call and we look forward to speaking with you again soon.

Operator: This will conclude today's conference. We disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day. 2018 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Department of Agricultural and Environmental Sciences Thank you for attending.

Speaker Change: This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Speaker Change: Okay.

Raul Vazquez: To wrap up, I want to thank the opportune team for their solid execution in Q2 and their ongoing commitment to our mission of empowering members to build a better future.

Operator: With that, operator, let's open up the line for questions. Thank you.

Operator: At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press star one on your telephone keypad and a confirmation tone to indicate your line is in the question Q. You may press star two if you'd like to withdraw your question from the Q. For participants using speaker equipment, it may be necessary to pick up your hand set before pressing the star keys. One moment please, we'll be poll for questions.

Operator: Thank you.

Speaker Change: Okay.

John Hecht: Our first question is from the line of John Hecht with Jeffries. Please see you too. Hey guys, thanks very much for taking my questions and I appreciate all the information updates and congratulations on some of the turning trends in the previous years.

Speaker Change: Pending enacted.

Jonathan Coblentz: First question, Jonathan, I think you might have noted this, but I just want to clarify that through the $10.1 million other non-liberating expenses, I, for the office expense or the workforce expense, there's just something else that's real bad. Sure, so the non-recurring expenses for the second quarter, John, it was $6 million related to the right down at the right of use asset for our headquarters in San Carlos and it was $2 million for severance for the workforce optimization that we announced at our prior earnings call, so that's a total of $8 million. Okay, that's helpful.

Raul Vazquez: And then, you know, with respect to the Western Union, I know you guys said the arrangements were for some of the other arrangements, but maybe talk about the ramp period and the ramp is going to be kind of over a period of time and do different geographies or how should we think about that? Yeah, John, this is Raul. Thanks for the question. So first, as you can imagine, we're very excited about this collaboration with Western Union.

Raul Vazquez: We think it really validates our underwriting abilities in particular for the other members that we serve, people that don't have a lot of experience with credit, maybe are new to credit. So we're really proud of the fact that Western Union ran an RFP process and we were selected. In terms of ramp period, it's very early in this collaboration, we're still planning the rollout, so I think what we prefer to do is come back in subsequent quarters once we're in market and have a sense of how things are going to go, but again, it's something we're very excited about.

Raul Vazquez: And then, maybe this plan of question would be like, can you give us like, you know, you had a lot of partnerships that you've been building out all the time, like the Medevank partnership, and we failed with the partnership. Maybe could you give us an update on how those are doing and maybe kind of the mix of what's being originated on the Internet versus the partners versus the branches? Yes, so John, on the Medevank partnership, that's a partnership that we think has gone very, very well.

Raul Vazquez: So the bulk of our originations now are through password. We think that they've really been a fantastic partner for us. In terms of how we go to market, how we're able to serve customers together, so it's something that we're very, very pleased with.

Raul Vazquez: That's as of Q1, so we have an update of that for Q2. Usually, what we do is we update these investor presentations after the conclusion of the quarter, so we'll update these statistics with the most recent numbers, John. But the other thing that we're very pleased with is on that page, investors will see that when we look at all of 2023, about half of our applicants used more than one channel during their application process, and three quarters used our mobile and digital channels as part of their application, even if they initiated in retail or in the contact center. Thank you for the question, John.

John Hecht: Thank you, John.

Halgit: Our next questions are from the line of Halgit with Be Rylei Securities. Please just see with your questions. Hey guys, great progress here.

Jonathan Coblentz: You know, on the list of all the finances you've done over the last several months, is there been any change in trajectory of the cost of capital or has it been relatively consistent in what you're feeling about how it might be right for cut, you know, over time? It should offer things. Thanks Hal. The cost of capital has improved. So for, we talked about this back in our Q4 earnings call that we had just completed our February securitization of 200 million, which was over 10 times over subscribed.

Jonathan Coblentz: And it actually priced 160 basis points better than the similar size just in October. So certainly that's been a very favorable trajectory. And right now we're continuing to see the market to be very strong. And so we certainly plan to do future ABS deals. And we're optimistic about where pricing for those could come in. Additionally, you talked about the potential for Fed rate cuts. While 80 percent or so of our debt is fixed rate, Fed rate cuts won't have an immediate impact. But over time, as we come to market with new term financings, we'll get the benefit of lower benchmark treasury rates. Okay, thank you, John. Thank you.

Operator: At this time, we've reached the end of the question and answer session.

Operator: And I'll turn the call back over to management for closing remarks. Thank you again for joining us on today's call. And we look forward to speaking with you again soon.

Operator: This will conclude today's conference. We disconnect your lines at this time.

Operator: Thank you for your participation and have a wonderful day.

Q2 2024 Oportun Financial Corp Earnings Call

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