OppFi Inc. (OPFI) Earnings

Management highlights

• Todd noted 2025 was a record year with adjusted net income up 69% y-o-y and 78 net promoter score. • Model 6 helps identify riskier borrowers and price risk. • Plan to release Model 6.1 in first half of 2026 to boost originations and reduce risk; Model 7.0 to launch in Q3 2026. • Lola project in final QA phase, plan to migrate to new system in Q3 2026. • New line of credit product to launch with bank partners in summer 2026. • Pam discussed fourth quarter financials: revenues up 17%, originations up 8%, receivables up 16%, adjusted net income up 27% to $26 million, adjusted EPS up 28% to 30 cents. Full-year 2025 GAAP net income $146 million, up from $84 million in 2024, adjusted net income $140 million up from $83 million in 2024.

Guidance

• 2026 full-year guidance: total revenues expected $650 million to $675 million (9%-13% increase over 2025). • Adjusted net income expected $153 million to $160 million (9%-14% increase over 2025). • Adjusted EPS expected $1.76 to $1.84 (11%-16% increase from 2025).

Segment performance

For 2025, total revenue increased 13.5% year-over-year. In the fourth quarter, revenues were $159 million, a 17% increase over Q4-24. Originations in Q4 increased 8% to $230 million, and ending receivables increased 16% to $493 million. Full-year 2025 total revenue was $597 million, up 14% from 2024, with originations up 12% to $899 million and ending receivables up 16% to $493 million. Model 6 has contributed to growth through risk-based pricing and better loan underwriting.

Risks & headwinds

• Higher delinquencies on summer vintages initially, though short duration loans work through system quickly. • Impact of geopolitical events and gas price changes on borrowers' ability to repay; monitoring customer sentiment index closely. • Need to continue monitoring credit performance and market dynamics to manage risks effectively.

Analyst Q&A

• Q: Good morning. Todd, maybe to start more on the macro side, and, you know, given the events going on right now geopolitically, can you remind us, since these are such short-duration loans, like how quickly loss emergence, like in weeks or months, you know, typically occurs? and specifically whether it's far too early to be talking about the impact of gas prices on some of your borrowers.

  A: Hey, David, good morning. Thank you for the question. We see early indicators, you know, very early within the month of when they were originated, looking at first payments, 28 days, 42 days out. So, we get earlier indicators and, you know, in the summer, You know, what was interesting was we saw Consumer Sentiment Index take a nosedive during the summer, and what followed was some higher, lower repayments, I should say. And we course-corrected pretty quickly. Also, you know, the business is structured with risk-based pricing now, which better prices risk for customers throughout the risk segments. And that helps our unit economics tremendously. So we are still able to grow into the fourth quarter. And the good news is we've definitely seen some improvement on those in December and in January on those early indicators. And it's giving us confidence to allow for double-digit growth on top and bottom line for 2026.

• Q: And then the second question yeah sorry about the about the cost of gas yeah there's no doubt um inflation is is uh it's a tax on our customers um you know it hits their discretionary income and ability to repay it's something we're watching closely uh we're hoping it's a temporary um but uh you know it's uh anytime prices of major items like gas go up uh rapidly like it just has over the last week um it's something that we're going to watch Also going to continue to watch the customer sentiment index and just make sure that the customer is in a good place. It's definitely going to be top of mind here kind of in the first half of 2026.

  A: Got it. Understood. And maybe just saying on credit, I know you don't provide specific loss guidance for 2026. And as you mentioned, it's obviously risk-based pricing has to be factored in. for total returns, but, um, is there anything we should think about in terms of the cadence of, of losses coming out of. Yeah. I mean, I think in the second half. Yeah. I mean, I mean, you know, there, there was some, there was some, uh, you know, tightening that, that was done, um, in response to, to some of the, some of the summer, uh, vintages. However, um, It's stable, and we're starting to feel more confident. Obviously, it's a wait and see here through the first quarter, but we think there's also some strategic initiatives that we're working on in the business that are going to unlock some more growth. We're very bullish on our model refit 6.1, which factors in more recent data. to allow us to give us confidence to grow. And then I'll point to the, you know, we're getting more yield. We're getting more yield to price the risk properly across the segments. So back, you know, when in 22, when there was some credit spikes due to rapid inflation, we didn't have risk-based pricing. So we weren't able, it wasn't a lever in our toolkit to be able to properly price risk across the segment. So we feel like with our model, with our new product line of credit, and with some of the risk-based pricing initiatives, we're well-positioned to continue to grow profitably and keep strong unit economics.

• Q: Maybe just one more follow-up, and then I'll get back to you. You noted in your presentation that your bank partners had increased sort of the percentage of their retention. I'm assuming it was notable enough for it to be included in the deck. You know, can you give us some color on, you know, both order of magnitude, but I guess more importantly, you know, is this something that usually cycles up and down that maybe we hadn't paid attention to, or if there's anything else that we should take away from that?

  A: Yeah, I mean, it's really just the In some states, every state is a little bit different because we abide by all federal and state laws. Banks do take higher percentages in some states of originations, and so obviously our gross to net comes down a little. But I think what it gives us comfort is the banks are very comfortable with our servicing and underwriting capabilities and are willing to put their equity into the originations, which is our interest alignment and builds confidence for us. And so we view it as a good thing long-term and think that it shows the confidence that the bank's having us.

• Q: Great. Thank you. We'll move next to Mike Grondahl with Northland Securities. Your line is open. Hey, thanks, guys. You know, I wanted to ask on those early summer vintages, as you look back, what are kind of the learnings from that? Was there any region to call out, a type alone or a risk tier to call out? Just kind of curious what you learned from some of those higher losses.

  A: Yeah, that's a great question. And, you know, we did look at, you know, we have – extensive data, banking data, cash flow data, in addition to a lot of customer-level data to look at, and the repayment, the actual repayment. So you can't get better data than that. There's nothing actually that stood out to us as being the sole reason as to why we started to see some strain and some lower repayments. One thing that is and has been is customer sentiment and index has been something that we've started to look at as being a way to, obviously not decision on credit, but as an early indicator of kind of how the customer is, how the customer is feeling. And there is some ability to see that when the customer is feeling something, or not feeling financially secure, or they don't feel like the direction of their financial path is upward, some lower repayments. But nothing to decision on. But yeah, we looked across the spectrum at a lot of different data points, and there was nothing that stood out as, oh, that's the reason for this happening. But that is why we monitor this on a daily basis, and it's something that we have really good reporting on. to be able to read and react. And something that you have to in this world, it's not kind of set up, forget it anymore on credit. That's why we're doing the refit. That's why we're building Model 7. The pace of model building and change is rapid now in this world. And I think we're well positioned to respond to it and make course corrections along the way.

• Q: And if there's one or two things to call out in 6.1, which you're relaunching now, what advantages or what benefits? Is it a certain data cohort, or what would you say you're getting an edge from there?

  A: Yeah, it's looking at repayment data. and reweighting our variables to have the model be more predictive. That's really what it is. So we look at a lot of different data points throughout the application process to determine credit worthiness. And when you actually have repayment data to support it, it becomes extremely powerful. So it's a reweighting. We have really good tools. Our credit team does a great job at you know, constantly back testing and finding areas for improvement. And so once they go to work and they start to, you know, run the regression analysis, we found some things where we could better weight different variables and produce a more accurate score.

• Q: Then, hey, just lastly, 24 had 95 million of free cash flow. $25 had $94 million. You know what I mean? Low to mid-90s each year. I would assume $26 is going to be in a similar ballpark, maybe adjusted for a little bit of growth. But how are you thinking about capital allocation? Do you have a chunk of bitty to buy in $26? I'm just trying to think about uses for another... large year for free cash flow?

  A: Yeah, well, you know, in the in the fourth quarter, you know, we did buy back some shares. We thought that the long term value of our stock price and the record performance that we've had and the consistency of that was not being valued properly. So we did we did buy back some shares with some of our capital. I'm happy to support the stock at those prices for sure. Listen, I kind of always say this, but it's a menu of options. We like to be well capitalized to read and react to the broader markets and see what's going on. I think that we're still active in the M&A space looking at stuff. We're exploring different strategic initiatives that would need capital. We've been investing in our tech systems. You know, we believe that Lola, when launched, will be the most cutting-edge tech-enabled lending system out there and allow us to plug into AI tools, so we're investing in that. So, you know, there is a menu of options. In the past, we've done a special dividend as well. But, yeah, we'll, you know, and we do anticipate free cash flow to, you know, continue to increase this year. But we're paying down debt, if you can see, and getting the benefit there as well. So, yeah, we're kind of using our cash wisely and strategically and like to be well capitalized to take advantage of situations that come up and continue to build the business.

• Q: Got it. Thank you. We'll move next to Dave Storms with StoneGate. Your line is open. Morning, and thanks for taking my questions. I wanted to start by maybe pivoting back to the macro question from earlier. You mentioned that in the summer, you guys' course credit corrected pretty quickly. You'd expect to do the same thing, again, should gas prices run. I was hoping if you could maybe illuminate a little more about what the playbook would be here. Is that targeting higher quality segments? Is that adjusting your pricing a little more aggressively? Maybe what does that look like?

  A: Yeah, absolutely. And that is something that, you know, we have successfully been able to do is targeting, you know, lower risk customers and even adjust pricing to accommodate more growth in the lower risk segments. You know, we've been launching that in the fourth quarter and we'll continue that throughout the year. Yeah, the lower risk segments are more predictable on payback and repayment rates. We're not seeing as much degradation in those segments, and we'll continue to market and target. We think that also the line of credit product that we're building when we launch will potentially open up some new geographies for us with our bank partners. We're excited about that. It will give us some new geographies to provide credit access for customers. But yeah, I mean, inflation is something we're watching, you know, and seeing, obviously, gas being, shooting up that quickly is concerning. But, you know, we're, you know, ready to respond if needed. And right now, it appears to be, you know, a temporary surge. Hopefully, it will come back down in line and won't impact our customer repayment rates.

• Q: That's very helpful. Thank you. Turn into, you know, the new model we'll obviously have this year. Maybe could you spend a little time talking about what's changed between, not maybe the models themselves, but the process of putting a model together? I got to imagine you guys have a lot of tools at your disposal to create better, faster, stronger models with the advent of AI and such. Are we just going to see that turn into faster model rollouts, or should we expect a step change in the quality of the models?

  A: Yeah, I mean, first of all, you're absolutely right. The AI tools and the tools that we're now to deploy, the pace of change has, you know, the cycle times of developing refits and developing new models has significantly reduced, which is a huge benefit to read and react. But, you know, the world's also changing at a much faster pace. I mean, I don't remember a time where gas went from $80 a barrel to $120 in one week. So, You have to. I mean, that's table stakes now, right? You have to be able to read and react and, you know, be out in front of, you know, any macro noise that may affect repayment rates and be ready to, you know, make changes as needed. But yeah, you will continue to see more rapid model development, reduced cycle times, and better, more predictive data as, you know, as we continue to operate.

• Q: That's great. And one more for me if I could sneak it in. Just looking at your guidance, anything here that's baked in that we should be aware of? Should we expect pretty simple seasonality on the year based on what you can see? Anything there would be very helpful.

  A: Yeah, I know. I mean, we're encouraged by some of the early vintage metrics of December and January. We're seeing a normal to strong tax refund season. I think it was well documented from the IRS that the average return would increase this year, which is also very beneficial for us from a credit perspective. And we see growth. We feel like we have一些好的增长举措，并且全年都对实现两位数的收入和利润增长充满信心。 Thank you for taking my questions. And once more for your questions, that is star and one. We'll pause for just a moment. And it does appear that there are no further questions at this time. This does conclude the Q&A portion of today's call, and this also concludes today's meeting. We appreciate your time, and you may now disconnect.