Q1 2026 Oportun Financial Corp Earnings Call

May 7, 2026

Operator: Welcome to Oportun Financial Corporation's Q1 2026 Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the speaker's remark, there will be a question and answer session. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Dorian Hare, Senior Vice President of Investor Relations. Mr. Hare, you may begin.

Speaker #2: Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Dorian Hare, Senior Vice President of Investor Relations, Mr. Hare, you may begin.

Speaker #2: Thanks, and hello everyone. With me to discuss Opportun's first quarter 2026 results are Doug Bland, our Chief Executive Officer and Paul Appleton, our Interim Chief Financial Officer, Treasurer and Head of Capital Markets.

Dorian Hare: Thanks. Hello, everyone. With me to discuss Oportun's Q1 2026 results are Doug Bland, our Chief Executive Officer, and Paul Appleton, our Interim Chief Financial Officer, Treasurer, and Head of Capital Markets. Kate Layton, Oportun's Chief Legal Officer, and Gaurav Rana, our Senior Vice President and General Manager of Lending will also join for the question and answer session. I'll remind everyone on the call or webcast that some of the remarks made today will include forward-looking statements related to our business, future results of operations and financial position, including projected adjusted ROE attainment and expected originations growth, planned products and services, business strategy, expense savings measures, and plans and objectives of management for 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.

Speaker #2: Kate Leighton, Opportun's Chief Legal Officer and Gaurav Rana, our Senior Vice President and General Manager of Lending, will also join for the question-and-answer session.

Speaker #2: A reminder, everyone, on the call or webcast, that some of the remarks made today will include forward-looking statements related to our business, future results of operations, and financial position, including projected adjusted ROE attainment and expected originations growth, planned products and services, business strategy, expense savings measures, and plans and objectives of management for future operations.

Speaker #2: 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.

Speaker #2: A more detailed discussion of the risk factors that could cause these results to differ materially are set forth in our earnings press release and in our filings with the Securities and Exchange Commission under the caption "Risk Factors." Including our upcoming Form 10Q filing for the quarter ended March 31, 2026.

Dorian Hare: A more detailed discussion of the risk factors that could cause these results to differ materially are set forth in our earnings press release and in our filings with the Securities and Exchange Commission under the caption Risk Factors, including our upcoming Form 10-Q filing for the Q1 ended 31 March 2026. Any forward-looking statements that we make on this call are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events other as required by law. Also on today's call, we will present both GAAP and non-GAAP financial measures, which we believe can be useful measures for the period-to-period comparisons of our core business, and which will provide useful information to investors regarding our financial condition and results of operations.

Dorian Hare: A more detailed discussion of the risk factors that could cause these results to differ materially are set forth in our earnings press release and in our filings with the Securities and Exchange Commission under the caption Risk Factors, including our upcoming Form 10-Q filing for the Q1 ended 31s March 2026. Any forward-looking statements that we make on this call are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events other as required by law. Also on today's call, we will present both GAAP and non-GAAP financial measures, which we believe can be useful measures for the period-to-period comparisons of our core business, and which will provide useful information to investors regarding our financial condition and results of operations.

Speaker #2: 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 as required by law.

Speaker #2: 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.

Speaker #2: A full list of definitions can be found in our earnings materials available at the Investor Relations section of our website. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP.

Dorian Hare: A full list of definitions can be found in our earnings materials available at the investor relations section of our website. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. A reconciliation of non-GAAP to GAAP financial measures is included in our earnings press release, our Q1 2026 supplement, and the appendix section of the Q1 2026 earnings presentation, all of which will be available at the investor relations section of our website at investor.oportun.com. In addition, this call is being webcast and an archived version will be available after the call, along with a copy of our prepared remarks. With that, I will now turn the call over to Doug.

Speaker #2: A reconciliation of non-GAAP to GAAP financial measures is included in our earnings press release, our first quarter 2026 supplement, and the appendix section of the first quarter 2026 earnings presentation.

Speaker #2: All of which will be available at the Investor Relations section of our website at investor.opportun.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.

Speaker #2: With that, I will now turn the call over to Doug.

Speaker #3: Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. I'm honored to be speaking with you for the first time as CEO of Opportun.

Doug Bland: Thanks, Dorian. Good afternoon, everyone. Thank you for joining us. I'm honored to be speaking with you for the first time as CEO of Oportun. I was drawn to Oportun because it stands out. A technology-driven platform with a critical mission and proven ability to responsibly improve the financial lives of people who are too often overlooked by traditional lenders. I also saw a business known for high-quality customer service uniquely positioned to seamlessly engage with both English and Spanish-speaking members across its retail contact center and mobile app. My initial meetings with team members across the company and with key stakeholders have only reinforced this view. I look forward to working with our team and board to strengthen the business, build deeper relationships with our members, and deliver long-term value for shareholders. I'm optimistic about what we can achieve together.

Speaker #3: I was drawn to Opportun because it stands out, a technology-driven platform with a critical mission, and proven ability to responsibly improve the financial lives of people who are too often overlooked by traditional lenders.

Speaker #3: I also saw a business known for high-quality customer service, uniquely positioned to seamlessly engage with both English and Spanish-speaking members, across its retail, contact center, and mobile app.

Speaker #3: My initial meetings with team members across the company and with key stakeholders have only reinforced this view. I look forward to working with our team and board to strengthen the business, build deeper relationships with our members, and deliver long-term value for shareholders.

Speaker #3: I'm optimistic about what we can achieve together. I joined Opportun on April 20, so I've been in the role for less than three weeks.

Doug Bland: I joined Oportun on 20 April, so I've been in the role for less than 3 weeks. I'm not going to use my first earnings call to declare a new strategy before I've completed a deeper re-review. What I can say from my early assessment is that the team has made real progress strengthening the foundation of the business, particularly profitability, liquidity, and funding costs, while important work remains to improve through cycle credit performance and rebuild a durable growth engine. The 2026 plan was already in motion before I arrived. Based on my review so far, I support reiterating the full-year guidance. I'll now hand it over to Paul for a review of how we are executing against our current strategy and our Q1 financial results. He will also provide our Q2 guidance while updating you on our full-year outlook.

Doug Bland: I joined Oportun on 20th April, so I've been in the role for less than three weeks. I'm not going to use my first earnings call to declare a new strategy before I've completed a deeper re-review. What I can say from my early assessment is that the team has made real progress strengthening the foundation of the business, particularly profitability, liquidity, and funding costs, while important work remains to improve through cycle credit performance and rebuild a durable growth engine. The 2026 plan was already in motion before I arrived. Based on my review so far, I support reiterating the full-year guidance. I'll now hand it over to Paul for a review of how we are executing against our current strategy and our Q1 financial results. He will also provide our Q2 guidance while updating you on our full-year outlook.

Speaker #3: I'm not going to use my first earnings call to declare a new strategy before I've completed a deeper review. What I can say from my earliest assessment is that the team has made real progress strengthening the foundation of the business, particularly profitability, liquidity, and funding costs.

Speaker #3: While important work remains, to improve through-cycle credit performance and rebuild a durable growth engine, the 2026 plan was already in motion before I arrived, yet based on my review so far, I support reiterating the full-year guidance.

Speaker #3: I'll now hand it over to Paul for a review of how we are executing against our current strategy and our first quarter financial results.

Speaker #3: He will also provide our Q2 guidance while updating you on our full-year outlook.

Speaker #2: Thank you, Doug, and good afternoon, everyone. I'd like to start by updating you on our strategic priorities, which include improving credit outcomes, strengthening business economics, and identifying high-quality originations.

Paul Appleton: Thank you, Doug. Good afternoon, everyone. I'd like to start by updating you on our strategic priorities, which include improving credit outcomes, strengthening business economics, and identifying high-quality originations. Starting with improving credit outcomes, we have remained in a tight credit posture, maintaining an emphasis on returning members amid an uncertain macroeconomic outlook for low and moderate-income households. Our annualized net charge-off rate was 12.65% in Q1 at the midpoint of our guidance range. In Q1, the proportion of originations to returning members was 79%, 16 percentage points higher than the 63% recorded in the prior year quarter. Importantly, our Q1 30+ delinquency rate of 4.5% met the expectations we set on our February earnings call, down 38 basis points sequentially and 18 basis points year over year.

Speaker #2: Starting with improving credit outcomes, we have remained in a tight credit posture, maintaining an emphasis on returning members amid an uncertain macroeconomic outlook for low and moderate-income households.

Speaker #2: Our annualized net charge-off rate was 12.65% in Q1, at the midpoint of our guidance range. In Q1, the proportion of originations to returning members was 79%, 16 percentage points higher than the 63% recorded in the prior year quarter.

Speaker #2: Importantly, our Q1 30-plus delinquency rate of 4.5% met the expectations we set on our February earnings call, down 38 basis points sequentially, and 18 basis points year over year.

Speaker #2: We expect the second quarter's 30-plus delinquency rate to improve further to a range between 4.1 and 4.2%, which is 22 to 32 basis points lower than two Q25 and 30 to 40 basis points lower sequentially than the first quarter.

Paul Appleton: We expect the Q2's 30+ delinquency rate to improve further to a range between 4.1% and 4.2%, which is 22 to 32 basis points lower than Q2 2025 and 30 to 40 basis points lower sequentially than the Q1. These proof points support our continued confidence that Q1 12.65% annualized net charge-off rate should be the highest of 2026. We also mentioned on our February earnings call that a key focus this year is continuing to invest in our credit decisioning capabilities to accelerate model training, deployment, and effectiveness. In Q2, we are introducing the latest iteration of our primary underwriting model, V13, which features an enhanced model architecture designed to better capture both long-term and more recent emerging trends.

Speaker #2: These proof points support our continued confidence that Q1's 12.65% annualized net charge-off rate should be the highest of 2026. We also mentioned on our February earnings call that a key focus this year is continuing to invest in our credit decisioning capabilities to accelerate model training, deployment, and effectiveness.

Speaker #2: In Q2, we are introducing the latest iteration of our primary underwriting model V13, which features an enhanced model architecture designed to better capture both long-term and more recent emerging trends.

Speaker #2: The model also incorporates new alternative data sources to improve predictive power and reduce adverse selection risk. Turning to business economics, we remain committed to improving on full-year 2025's 17.5% adjusted ROE and 6.8% GAAP ROE, making progress towards our objective of 20 to 28 percent GAAP ROEs on an annual basis.

Paul Appleton: The model also incorporates now new alternative data sources to improve predictive power and reduce adverse selection risk. Turning to business economics, we remain committed to improving on full-year 2025 17.5% adjusted ROE and 6.8% GAAP ROE, making progress towards our objective of 20% to 28% GAAP ROEs on an annual basis. A key component of this is continuing our expense discipline. During Q1, total OPEX declined 1% year over year to $91 million, in line with a substantially flat expectation we set for the full year. Another important part of our efforts to attain our ROE goal is exploring the launch of risk-based pricing. As discussed on our last earnings call, this effort would reintroduce pricing above 36% for shorter-term loans and higher-risk segments, including some customers we are not able to approve today.

Speaker #2: A key component of this is continuing our expense discipline. During Q1, total OPEX declined 1% year over year to 91 million dollars in line with a substantially flat expectation we've set for the full year.

Speaker #2: Another important part of our efforts to attain our ROE goal is exploring the launch of risk-based pricing. As discussed on our last earnings call, this effort would reintroduce pricing above 36% for shorter-term loans and higher-risk segments, including some customers we're not able to approve today.

Speaker #2: We have made good progress with this initiative, including signing a letter of intent with a new bank partner. As a result, we continue to expect to roll this initiative out in the second half of the year.

Paul Appleton: We have made good progress with this initiative, including signing a letter of intent with a new bank partner. As a result, we continue to expect to roll this initiative out in the H2 of the year. Last month, we launched another initiative, a payment protection offering that we expect will provide more certainty for our members and a positive financial contribution to Oportun in future years. Payment protection is an opt-in offering that members can elect during the loan application process, which provides protection against unforeseen events like involuntary unemployment, death, or disability by completely or partially paying off the loan. The offering is currently available to loan applicants in several states, and in coordination with our bank partner, we expect to introduce the offering across most of our footprint in the coming months.

Speaker #2: Last month, we launched another initiative, a payment protection offering, that we expect will provide more certainty for our members and a positive financial contribution to Opportun in future years.

Speaker #2: Payment protection is an opt-in offering that members can elect during the loan application progress, which provides protection against unforeseen events like involuntary unemployment, death, or disability by completely or partially paying off the loan.

Speaker #2: The offering is currently available to loan applicants in several states and in coordination with our bank partner, we expect to introduce the offering across most of our footprint in the coming months.

Speaker #2: Due to the phased rollout, we are currently assuming only a modest financial benefit from the payment protection initiative in our 2026 guidance. However, at scale, we see a potential for profit enhancement in future years.

Paul Appleton: Due to the phased rollout, we are currently assuming only a modest financial benefit from the payment protection initiative in our 2026 guidance. At scale, we see a potential for profit enhancement in future years due to lower credit losses on enrolled loans and fees earned. Regarding identifying high-quality originations. In Q1, originations declined by 11%. This was in line with our expectations, reflecting typical seasonality and the higher mix of returning borrowers I referenced a moment ago. We continue to expect to grow originations in the mid-single-digit percentage range this year. Expanding our secured personal loan portfolio secured by members autos remains a key pillar of our responsible growth strategy.

Speaker #2: Due to lower credit losses on enrolled loans and fees earned, lastly, regarding identifying high-quality originations—in Q1, originations declined by 11%. Now, this was in line with our expectations, reflecting typical seasonality and the higher mix of returning borrowers I referenced a moment ago.

Speaker #2: We continue to expect to grow originations in the mid-single-digit percentage range this year. Expanding our secured personal loan portfolio, secured by members' autos, remains a key pillar of our responsible growth strategy.

Speaker #2: Partially offsetting the unsecured personal loan originations declining in Q1, secured personal loan originations grew 12% year over year and the secured portfolio grew 30% year over year to 233 million dollars.

Paul Appleton: Partially offsetting the unsecured personal loan originations decline in Q1, secured personal loan originations grew 12% year-over-year, and the secured portfolio grew 30% year-over-year to $233 million. As a result, secured personal loans now represent 9% of our loan portfolio, up from 7% last year. Importantly, average losses on secured personal loans continue to run substantially lower than unsecured personal loans in Q1. Turning now to Q1 highlights on slide 6. We recorded our sixth consecutive quarter of GAAP profitability, with net income of $2.3 million and diluted EPS of $0.05 per share. We also generated adjusted net income of $10 million and adjusted EPS of $0.21 per share.

Speaker #2: As a result, secured personal loans now represent 9% of our own portfolio, up from 7% last year. Importantly, average losses on secured personal loans continue to run substantially lower than unsecured personal loans in the first quarter.

Speaker #2: Turning now to Q1 highlights on Slide 6, we recorded our sixth consecutive quarter of GAAP profitability with net income of 2.3 million dollars and diluted EPS of 5 cents per share.

Speaker #2: We also generated adjusted net income of 10 million dollars and adjusted EPS of 21 cents per share. Total revenue of 229 million dollars declined by 7.1 million dollars or 3% year over year, which again was in line with our expectations and driven by the 11% year over year decline in originations I mentioned a moment ago.

Paul Appleton: Total revenue of $229 million declined by $7.1 million, or 3% year over year, which again, was in line with our expectations and driven by the 11% year over year decline in originations I mentioned a moment ago. Net decrease in fair value was $86 million this quarter due to $85 million in net charge-offs. The net decrease in fair value was $13 million higher than the prior period, which benefited from a favorable $12 million mark-to-market adjustment on loans. Q1 interest expense was $48 million, down $9 million year over year. This improvement reflects recent balance sheet optimization initiatives that I'll share shortly. Net revenue was $95 million, down $11 million year over year as the impact of lower total revenue and fair value offset the benefit from lower interest expense.

Speaker #2: Net decrease in fair value was 86 million dollars this quarter due to 85 million dollars in net charge-offs. The net decrease in fair value was 13 million dollars higher than the prior period, which benefited from a favorable 12 million dollar mark-to-market adjustment on loans.

Speaker #2: First quarter interest expense was 48 million dollars, down 9 million dollars year over year. This improvement reflects recent balance sheet optimization initiatives that I'll share shortly.

Speaker #2: Net revenue was 95 million dollars, down 11 million dollars year over year, as the impact of lower total revenue and fair value offset the benefit from lower interest expense.

Speaker #2: Operating expenses were 91 million dollars, down 1.3 million dollars or 1% year over year, reflecting continued cost discipline. Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes, was 29 million dollars in the first quarter.

Paul Appleton: Operating expenses were $91 million, down $1.3 million or 1% year-over-year, reflecting continued cost discipline. Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes, was $29 million in Q1. This reflects a year-over-year decrease of $4.2 million as lower total revenue and higher net charge-offs more than offset lower interest expense and adjusted operating expense. Adjusted net income was $10 million, down $8.4 million year-over-year due to lower net revenue, partially offset by lower adjusted operating expense. Adjusted EPS declined year-over-year from $0.40 a share to $0.21 a share. Finally, GAAP net income of $2.3 million was similarly down $7.4 million year-over-year.

Speaker #2: This reflects a year-over-year decrease of $4.2 million, as lower total revenue and higher net charge-offs more than offset lower interest expense and adjusted operating expense.

Speaker #2: Adjusted net income was 10 million dollars, down 8.4 million dollars year over year, due to lower net revenue, partially offset by lower adjusted operating expense.

Speaker #2: Adjusted EPS declined year over year, from 40 cents a share to 21 cents a share. Finally, GAAP net income of 2.3 million dollars was similarly down 7.4 million dollars year over year.

Speaker #2: Turning now to capital and liquidity, as shown on Slide 9, we continue to strengthen our debt capital structure through continued balance sheet optimization by further debt, lowering our overall cost of capital, and enhancing liquidity.

Paul Appleton: Turning now to capital and liquidity as shown on slide 9, we continue to strengthen our debt capital structure through continued balance sheet optimization by further reducing higher cost corporate debt, lowering our overall cost of capital, and enhancing liquidity. I'm pleased with the progress we made deleveraging, ending the quarter with a 6.8 times debt-to-equity ratio. That's down from 7.6 times a year ago and materially lower than the peak leverage of 8.7 times we reported in Q3 2024. The improvements achieved since then and through the end of Q1 include consistent GAAP profitability, a $69 million or 21% increase in shareholders equity, and a $70 million or 30% reduction in our high-cost corporate debt.

Speaker #2: I'm pleased with the progress we made de-leveraging, ending the quarter with a 6.8-times debt-to-equity ratio. That's down from 7.6 times a year ago and materially lower than the peak leverage of 8.7 times we reported in 3Q24.

Speaker #2: The improvements achieved since then and through the end of the first quarter include consistent GAAP profitability, a 69 million dollar or 21% increase in shareholders' equity, and a 70 million dollar or 30% reduction in our high-cost corporate debt.

Speaker #2: Q1 interest expense was 48 million dollars, and that was 9 million dollars or 16% lower than the prior year quarter, supporting our sustained profitability.

Paul Appleton: Q1 interest expense was $48 million, that was $9 million or 16% lower than the prior year quarter, supporting our sustained profitability. This was driven by corporate debt repayments as well as actions taken related to our ABS notes and warehouse facilities. Also supporting our strong liquidity position, our cash flow has enabled us to continue to grow our unrestricted cash balance to $130 million as of the end of Q1 2026, up $25 million from year-end 2025 and up $52 million year-over-year. With this strong cash position, we paid down another $30 million of high-cost corporate debt following the end of Q1, lowering our remaining corporate debt principal balance to $135 million.

Speaker #2: This was driven by corporate debt repayments as well as actions taken related to our ABS notes and warehouse facilities. Also supporting our strong liquidity position, our cash flow has enabled us to continue to grow our unrestricted cash balance to 130 million dollars as of the end of 1Q26, up 25 million dollars from year-end 2025 and up 52 million dollars year over year.

Speaker #2: With this strong cash position, we paid down another 30 million dollars of high-cost corporate debt following the end of the first quarter. Lowering our remaining corporate debt principal balance to 135 million dollars.

Speaker #2: Corporate debt repayments since the facilities' October 2024 inception now total 100 million dollars, reducing outstandings from the initial 235 million dollar balance to 135 million, resulting in 15 million dollars in annual run rate expense savings.

Paul Appleton: Corporate debt repayments since the facility's October 2024 inception now total $100 million, reducing outstandings from the initial $235 million balance to $135 million, resulting in $15 million in annual run rate expense savings. On the capital market side, we completed a $485 million ABS transaction at a 5.32% yield in February. Over the last 12 months, we have issued $1.9 billion in ABS bonds at sub 6% yields, demonstrating a sustained access to capital on favorable terms. Next, I'd like to turn to our updated guidance as shown on slide 10. While our member base remains resilient, inflation above Federal Reserve targets, uneven job creation, policy uncertainty, and higher gas prices continue to create a cautious environment for low to moderate income consumers.

Speaker #2: On the capital market side, we completed a 485 million dollar ABS transaction at a 5.32% yield in February. Over the last 12 months, we have issued 1.9 billion dollars in ABS bonds at sub-6% yields, demonstrating a sustained access to capital on favorable terms.

Speaker #2: Next, I'd like to turn to our updated guidance as shown on Slide 10. While our member base remains resilient, inflation above Federal Reserve targets uneven job creation, policy uncertainty, and higher gas prices continue to create a cautious environment for low-to-moderate income consumers.

Speaker #2: We are particularly monitoring the impact of high fuel prices on our members, and while we have not seen any deterioration in our metrics as a result, we understand the pressure this can place on our customers if higher prices persist.

Paul Appleton: We are particularly monitoring the impact of high fuel prices on our members, and while we have not seen any deterioration in our metrics as a result, we understand the pressure this can place on our customers if higher prices persist. Consequently, our outlook prudently assumes we maintain a tight credit posture through the balance of the year. We remain well-positioned to adjust quickly as conditions evolve. Our outlook for Q2 is total revenue of $227 to 232 million, annualized net charge-off rate of 12.2% ± 15 basis points, and adjusted EBITDA of $34 to 39 million. At the midpoint, our Q2 revenue guidance implies a modest sequential increase from Q1 and a lesser year-over-year decline driven by higher originations from Q1 levels.

Speaker #2: Consequently, our outlook prudently assumes we maintain a tight credit posture through the balance of the year. We remain well-positioned to adjust quickly as conditions evolve.

Speaker #2: Our outlook for the second quarter is total revenue of 227 to 232 million dollars, annualized net charge-off rate of 12.2%, plus or minus 15 basis points.

Speaker #2: And adjusted EBITDA of $34 to $39 million. At the midpoint, our Q2 revenue guidance implies a modest sequential increase from Q1 and a lesser year-over-year decline, driven by higher originations from first quarter levels.

Speaker #2: Our Q2 annualized net charge-off rate midpoint guidance of 12.2% implies 45 basis points of sequential improvement from the first quarter, supported by the favorable 30-plus delinquency trends I discussed earlier.

Paul Appleton: Our Q2 annualized net charge-off rate midpoint guidance of 12.2% implies 45 basis points of sequential improvement from Q1, supported by the favorable 30+ delinquency trends I discussed earlier. At the midpoint of $37 million, our Q2 adjusted EBITDA guidance implies strong sequential and a return to year-over-year growth of $5 million or 17%, driven primarily by lower interest expense along with ongoing operating expense discipline. We are fully reiterating our full year 2026 guidance, including total revenue of $935 to 955 million, annualized net charge-off rate of 11.9% ±50 basis points, adjusted EBITDA of $150 to 165 million, adjusted net income of $74 to 82 million, and adjusted EPS of $1.50 to 1.65.

Speaker #2: At the midpoint of 37 million dollars, our Q2 adjusted EBITDA guidance implies strong sequential and a return-to-year-over-year growth of 5 million dollars or 17%, driven primarily by lower interest expense, along with ongoing operating expense discipline.

Speaker #2: We are fully reiterating our full-year 2026 guidance, including total revenue of $935 to $955 million, an annualized net charge-off rate of 11.9%, plus or minus 50 basis points, adjusted EBITDA of $150 to $165 million, adjusted net income of $74 to $82 million, and adjusted EPS of $1.50 to $1.65.

Speaker #2: Our full-year 2026 guidance continues to be underpinned by our expectations for mid-single-digit originations growth, a 1 to 2 percent decline in average daily principal balance, a reduction in interest expense of at least 10%, and substantially flat operating expenses.

Paul Appleton: Our full year 2026 guidance continues to be underpinned by our expectations for mid-single-digit originations growth, a 1% to 2% decline in average daily principal balance, a reduction in interest expense of at least 10%, and substantially flat operating expenses. Also, our full year annualized net charge-off rate midpoint guidance of 11.9% continues to indicate slight year-over-year improvement. Midpoint growth of 16% in adjusted EPS and 6% in adjusted EBITDA, even amid macro uncertainty for low to moderate income consumers, reflects the resilience of both our members and our business model. Before I turn it back to Doug, let me conclude with a brief summary of our unit economics progress. Although our long-term targets are GAAP targets, I'll reference adjusted metrics because they remove non-recurring items and better reflect our future run rate.

Speaker #2: Also, our full-year annualized net charge-off rate midpoint guidance of 11.9% continues to indicate slight year-over-year improvement. Midpoint growth of 16% in adjusted EPS and 6% in adjusted EBITDA even amid macro uncertainty for low-to-moderate income consumers reflects the resilience of both our members and our business model.

Speaker #2: Before I turn it back to Doug, let me conclude with a brief summary of our unit economics progress. Although our long-term targets are GAAP targets, I'll reference adjusted metrics because they remove non-recurring items and better reflect our future run rate.

Paul Appleton: As shown on slide 11, we generated 10.5% adjusted ROE during Q1. With ramping originations and lower credit losses embedded in our full-year guidance, we expect to improve on our Q1 adjusted ROE performance in the balance of the year and outpace last year's 17.5% adjusted ROE. I'm encouraged by the positive fundamentals we exhibited in Q1, particularly on a year-over-year improvement in cost of funds and operating expense efficiency. Our balance sheet optimization initiatives drove improvement in our cost of funds from 8.2% to 7.0%, a level well below our 8.0% target. Expense discipline-enabled improvement in our adjusted OPEX ratio from 13.3% to 12.7%, nearing our 12.5% target.

Speaker #2: As shown on Slide 11, we generated 10.5% adjusted ROE during the first quarter. With ramping originations and lower credit losses embedded in our full-year guidance, we expect to improve on our first quarter adjusted ROE performance in the balance of the year, an outpace last year's 17.5% adjusted ROE.

Speaker #2: I'm encouraged by the positive fundamentals we exhibited in Q1, particularly on a year-over-year improvement in cost of funds and operating expense efficiency. Our balance sheet optimization initiatives drove improvement in our cost of funds from 8.2% to 7.0%, a level well below our 8.0% target.

Speaker #2: And expense discipline enabled improvement in our adjusted OPEX ratio from 13.3% to 12.7%, nearing our 12.5% target. Our North Star remains delivering GAAP ROEs of 20 to 28 percent annually.

Paul Appleton: Our North Star remains delivering GAAP ROEs of 20% to 28% annually. We plan to achieve this by driving positive credit outcomes, growing the owned loan portfolio, and effectively managing operating expenses. We also intend to continue to drive our debt-to-equity leverage ratio this year towards our 6 times target by reducing our debt outstanding and continuing to grow GAAP profitability. With that, Doug, back over to you.

Speaker #2: We plan to achieve this by driving positive credit outcomes, growing the owned loan portfolio, and effectively managing operating expenses. We also intend to continue to drive our debt-to-equity leverage ratio this year towards our six-times target, by reducing our debt outstanding and continuing to grow GAAP profitability.

Speaker #2: With that, Doug, back over to you.

Speaker #1: Thanks, Paul. To close, I'd like to emphasize that while Oportun's foundation is stronger than it was, we need to establish predictable outcomes that result in durable growth.

Doug Bland: Thanks, Paul. To close, I'd like to emphasize that while Oportun's foundation is stronger than it was, we need to establish predictable outcomes that result in durable growth. My focus now is on disciplined execution, deeper assessment, and coming back to you on our Q2 earnings call with a clearer view of the path forward. I want to underscore that Oportun's mission to empower members to build a better future will continue. I see a tremendous opportunity to accelerate this mission. It's my focus to partner with our teams to determine ways to accomplish this. I'm energized by what's ahead. With that operator, let's open it up for questions.

Speaker #1: My focus now is on disciplined execution, deeper assessment, and coming back to you on our second quarter earnings call with a clearer view of the path forward.

Speaker #1: I want to underscore that opportunist mission to empower members to build a better future will continue. I see a tremendous opportunity to accelerate this mission.

Speaker #1: It's my focus to partner with our teams to determine ways to accomplish this. I'm energized by what's ahead. With that, operator, let's open it up for questions.

Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. The first question comes from the line of Brendan McCarthy with Sidoti. Please go ahead.

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Speaker #2: The first question comes from the line of Brendan McCarthy, with Sidoti, please go ahead.

Speaker #3: Great. Thanks, everybody, for taking my questions and welcome Doug. I just wanted to start off on the outlook here. Originations down 11% year-over-year. That makes sense, considering your tighter underwriting position.

Brendan McCarthy: Great. Thanks, everybody, for taking my questions. Welcome, Doug. I just wanted to start off on the outlook here. Originations down 11% year over year. That makes sense considering your tighter underwriting position. How does the new risk-based pricing initiative fit into the 2026 guidance that calls for a mid-single digits increase for the year?

Speaker #3: How does the new risk-based pricing initiative fit into the 2026 guidance that calls for mid-single-digits increase for the year?

Speaker #4: Thanks, Brendan. Appreciate the question. Thanks, Brendan. Appreciate the question. So when it comes to the risk-based pricing initiative, as I mentioned in my comments, we're making good progress rolling out that program.

Paul Appleton: Thanks, Brendan. Appreciate the question. When it comes to the risk-based pricing initiative, as I mentioned in my comments, we're making good progress, rolling out that program. As you know, for most of Oportun's history, we did price above 36%. As we reintroduced this pricing regime, we certainly want to be thoughtful about how the glide path and what it looks like. For guidance, we've embedded a little bit of benefit in there for 2026, but just a small amount given, we do want to test into it and the program is not live yet.

Speaker #4: As you know, for most of opportunist history, we did price above 36%. But as we reintroduced this pricing regime, we certainly want to be thoughtful about how the glide path and what it looks like.

Speaker #4: And so for guidance, we've invaded a little bit of benefit in there for 2026, but just a small amount given we do want to test into it and the program is not live yet.

Speaker #3: Understood. I appreciate the color there. Looking at interest expense, it looks like a pretty steep year-over-year decline. And if you annualize the Q1, it looks like you're trending well under that target for a 10% reduction in interest expense for full year 2026.

Brendan McCarthy: Understood. I appreciate the color there. Now looking at interest expense, it looks like at a pretty steep year-over-year decline. If you annualize the Q1, it looks like you're trending well under that target for a 10% reduction in interest expense for full year 2026. Do you see room there to boost margins over the course of the year?

Speaker #3: Do you see room there to boost margins over the course of the year?

Paul Appleton: Possibly, yes. I see what you're looking at when you look at the run rate there. We're obviously pleased with the progress in paying down the corporate debt. As I mentioned in my comments, right, we're down $100 million from the initial balance of the corporate loan, and that's driving, you know, $15 million annualized interest expense run rate benefit. As I mentioned in the comments as well, we paid down another $30 million, right? That's included in that $100 million after the end of the quarter. Yeah, there may be a bit of opportunity there, especially given some of the ABS execution we've gotten recently.

Speaker #4: Possibly, yes. I see what you're looking at when you look at the run rate there. We're obviously pleased with the progress in paying down the corporate debt.

Speaker #4: As I mentioned in my comments, right, we're down 100 million dollars from the initial balance of the corporate loan. And that's driving 15 million dollar annualized interest expense run rate benefit.

Speaker #4: And as I mentioned in the comments as well, we paid down another 30 million dollars, right, that's included in that 100 million dollar after the end of the quarter.

Speaker #4: So yeah, there may be a bit of opportunity there especially given some of the ABS execution we've gotten recently.

Brendan McCarthy: That makes sense. As a follow-up on leverage, Paul, I think you mentioned you're at about 6.8 times leverage at this point. You're trending pretty quickly towards your 6.1 times target. How can we think about your capital allocation, you know, maybe once you reach that target, how might capital allocation change going forward?

Speaker #3: That makes sense. And as a follow-up on leverage, Paul, I think you mentioned you're at about 6.8 times leverage at this point. You're trending pretty quickly towards your 6.1 times target.

Speaker #3: How can we think about your capital allocation, maybe once you reach that target? How might capital allocation change going forward?

Speaker #4: Yeah, great question, Brendan. Thank you. Look, the capital allocation priorities we have right now continuing to invest in profitable growth and paying down the corporate debt, right?

Paul Appleton: Great question, Brendan. Thank you. Look, the capital allocation priorities we have right now are continuing to invest in profitable growth and paying down the corporate debt, right? You know, the corporate debt, when we pay that down, that comes with a certain return, right? We know exactly the expense we're going to save, and the corporate debt does have a high price to it. You know, we're at that 6.8 leverage you mentioned just now. As we said on our last earnings call, we do expect to trend towards that by the end of the year. For now, I think with those are gonna be our two continued priorities, and then we can look beyond that once we reach the target.

Speaker #4: The corporate debt, when we pay that down, that comes with a certain return, right? We know exactly the expense we're going to save. And the corporate debt doesn't have a high price to it.

Speaker #4: We're at that 6.8 leverage you mentioned just now. As we said on our last earnings call, we do expect to trend towards that by the end of the year.

Speaker #4: So for now, I think those are going to be our two continued priorities. And then we can look beyond that once we reach the target.

Speaker #3: That's great. Thanks, Paul. Thanks, Doug. That's all from me. I'll hop back in the queue.

Brendan McCarthy: That's great. Thanks, Paul. Thanks, Doug. That's all from me. I'll hop back in the queue.

Speaker #4: Thank you, Brendan.

Gaurav Rana: Thank you, Brendan.

Paul Appleton: Thank you, Brendan.

Speaker #2: Thank you. Next question comes from the line of Alec Lebowski, with Jefferies. Please go ahead.

Operator: Thank you. Next question comes from the line of Alec Lebowski with Jefferies. Please go ahead.

Speaker #5: Good afternoon and thank you for taking my question. Welcome, Doug. I was just wondering if you've seen any changes to demand trends given the high fuel prices.

Alec Lebowski: Good afternoon, thank you for taking my question. Welcome, Doug. I was just wondering if you've seen any changes to demand trends given the high fuel prices. Has this driven more borrowing kinda given cash constraints? Thank you.

Speaker #5: Has this driven more borrowing kind of given cash constraints? Thank you.

Speaker #4: In the first quarter, Alec, we continue to see demand outpace our originations. So certainly continue to be robust demand. In the market.

Paul Appleton: In Q1, Alec, we continue to see demand outpace our originations. Certainly continue to be robust demand in the market.

Speaker #5: Great. Thank you. And then just a second question. Just kind of thinking about the current mix of digital versus branch originations, just wondering if you plan to evaluate any changes moving forward and how we should expect this to kind of trend in the future.

Alec Lebowski: Great. Thank you. Just a second question. Just kind of thinking about the current mix of digital versus branch originations, just wondering if you plan to evaluate any changes moving forward and how we should expect this to kind of trend in the future. Thank you.

Speaker #5: Thank you.

Speaker #6: Hey, Alex. This is Gaurav here. The trends that we have today will you can expect that to continue through the course of the year.

Gaurav Rana: Hey, Alec Lebowski. This is Gaurav here. The trends that we have today you can expect that to continue through the course of the year. As Paul alluded, we're still guiding towards the mid-single digit growth in originations and we've lined up our marketing spend to grow accordingly to drive that growth.

Speaker #6: As Paul alluded, we're still guiding towards the mid-single-digit growth in originations. And we've lined up our marketing spend to grow accordingly to drive that growth.

Speaker #5: Thanks.

Alec Lebowski: Thanks.

Operator: Thank you. Next question comes from the line of Brendan McCarthy with Sidoti. Please go ahead.

Speaker #2: Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Brendan McCarthy, with Sidoti.

Speaker #2: Please go ahead.

Speaker #3: Great, thank you. Just a quick follow-up here. On the net charge-off guidance, I think hitting the 11.9% midpoint for the full year assumes a pretty nice step down in the net charge-off rate to an average of like 11.6% for the rest of the year.

Brendan McCarthy: Great. Thank you. Just a quick follow-up here, on the net charge-off guidance. I think hitting the 11.9% midpoint for the full year, it assumes a pretty nice step down in the net charge-off rate to an average of like 11.6% for the rest of the year. I guess how confident are you that you can really hit that midpoint there? What specific, you know, credit indicators are you looking for?

Speaker #3: I guess, how confident are you that you can really hit the midpoint there? What specific credit indicators are you looking for?

Speaker #4: Thank you for the follow-up question, Brendan. As you know, the 12.65% net charge-off rate we reported in the first quarter was elevated, but we expected, right?

Paul Appleton: Thank you for the follow-up question, Brendan. As you know, the 12.65% net charge-off rate we reported in Q1 was elevated, but we expected, right? It was the midpoint of our guidance, and we achieved that. As we mentioned on prior earnings calls, the reason for that spike in the net charge-offs was due to the mix shift that we experienced in H1 of 2025, where new loan originations accounted for a greater share of the mix than they do now. You know, we've shifted the mix back to returning borrowers. That's a positive tailwind for credit. You look at the guidance we set for Q2, right?

Speaker #4: It was the midpoint of our guidance, and we achieved that. And as we mentioned on prior earnings calls, the reason for that spike in the net charge-off was due to the makeshift that we experienced in the first half of 2025 where new loan originations accounted for a greater share of the mix than they do now.

Speaker #4: And so we've shifted the mix back to returning borrowers. So that's a positive tailwind for credit. Then you look at the guidance we set for second quarter, right?

Paul Appleton: We're doing that very informed based on what we're seeing in roll rates, late-stage roll rates going into that will contribute to the Q2 charge-offs. The last and the third item that we see as a positive trend is the 30+ day delinquencies I mentioned in the comments, where those are trending lower than the Q1. I think all those signs point to continued improvement as you no doubt have factored in, right? When you put in the 12.65, the 12.2, and the 11.9 target for the full year, that does imply, you know, we're at the 11 handle for the H2, in line with our sort of 9% to 11% target.

Speaker #4: We're doing that very informed based on what we're seeing in roll rates late-stage roll rates going into that will contribute to the second quarter charge-off.

Speaker #4: Then the last and the third item that we see as a positive trend is the 30-plus-day delinquency that I I mentioned in the comments, where those are trending lower than the first quarter.

Speaker #4: So I think all those signs point to a continued improvement. As you no doubt have factored in, right, when you put in the 12.65, the 12.2, and the 11.9 target for the full year, that does imply we're at the 11 handle for the second half of the year.

Speaker #4: In line with our sort of 9 to 11 percent target.

Brendan McCarthy: Got it. That's great. Thanks, Paul. That's all for me.

Speaker #3: Got it. That's great. Thanks, Paul. That's all from me.

Speaker #4: Thank you, Brendan.

Gaurav Rana: Thank you, Brendan.

Speaker #2: Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Doug Bland, Chief Executive Officer for closing comments.

Operator: Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Doug Bland, Chief Executive Officer, for closing comments.

Doug Bland: Thank you everyone for joining today's call. Before we close, I do want to say a special thanks to this team, in particular Kate, Paul, and Gaurav in terms of working through the transition that they've been through. Through is even under best circumstances never easy and simple. I think the team has done an excellent job continuing to drive this business focused on discipline. You heard the results that they've been able to achieve during this quarter. I want to thank this team and look forward to working with them as we move forward. We appreciate the continued interest in Oportun by everyone and look forward to speaking with you again soon. Thank you.

Speaker #7: Thank you, everyone, for joining today's call. Before we close, I do want to say a special thanks to this team in particular, Kate, Paul, and Gaurav in terms of working through the transition that they've been through through even under best circumstances, never easy.

Speaker #7: In simple, and I think the team has done an excellent job continuing to drive this business, focused on discipline, and you heard the results that they've been able to achieve during this quarter.

Speaker #7: So I want to thank this team and look forward to working with them as we move forward. We appreciate the continued interest and opportunity by everyone and look forward to speaking with you again soon.

Speaker #7: Thank you.

Operator: Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.