OppFi Inc. Q2 FY2025 earnings call

Key Points - Second quarter was a record quarter for OppFi with record revenue, adjusted net income, and operating margin. - Increased full-year 2025 revenue, adjusted net income, and adjusted EPS guidance. - Total net originations up 14%, revenue up 13%, adjusted net income up 59% y-o-y. - Underwriting model Model 6 performed well, net charge-off rate improved. - Auto approval rate improved to 80% in Q2 2025 from 76% in Q2 2024, boosting net revenue. - OppLoans had 79 NPS score and 89% CSAT. - Launched new loan origination lending application LOLA, plans to migrate over next 6 months. - Bitty continued to add accretive profitability and cash flow in small business lending.

In the second quarter, OppFi achieved record quarterly revenue, adjusted net income, and operating margin. Total net originations increased by 14%, revenue by 13%, and adjusted net income by 59% year-over-year. The net charge-off rate improved to 32% of revenue compared to 33% in the prior year. Bitty continued to add accretive profitability and cash flow. Finance receivables increased 13% to $438 million year-over-year. Total revenue reached a quarterly record of $142 million (13% y-o-y growth), net revenue was $100 million (16% increase), adjusted net income was $39 million (59% increase), and adjusted EPS grew to $0.45 from $0.29 last year.

Forward-Looking - Increased full-year 2025 revenue guidance to between $578 million and $605 million, representing a 10% to 15% increase compared to 2024. - Increased adjusted net income guidance to between $125 million and $130 million, a 51% to 57% increase compared to 2024. - Increased adjusted EPS guidance to between $1.39 and $1.44 based on anticipated diluted weighted average share count of 90 million shares.

Risks - Macro factors like tariffs, consumer inflation, and unemployment could impact business. - Economic environment changes may affect default frequencies of new loan originations.

Q: A little more high level for both Todd and Pam on long-term margin structure or operating model target ROE or net margin?

A: Todd mentioned they had laid out initial thoughts when he returned as CEO in 2022, are satisfied with current performance, and see potential for 20% margin and a combination of growth and profitability.

Q: Granularly on the quarter, context around average origination size increase?

A: Todd said top end price of $4,000 hadn't been adjusted for almost 10 years, now able to increase to closer to $5,000, average loan size up about $100 year-over-year with newer larger loans infiltrating the portfolio.

Q: Growth in percentage of loans retained by bank partners, contractual or concentrated?

A: Todd said depending on the state, abides by laws, and in some states there was more growth in loans retained by bank partners.

Q: Thoughts on credit, macro health of underlying consumer, DQ or first payment default trends and impact on larger originations?

A: Todd said they were cautious, still running tight, watching macro indicators like unemployment and inflation, and Model 6 allows dynamic reading and reacting, focusing on long-term charge-off rate.

Q: Expenses, how thinking about marketing expenses given competitive factors?

A: Todd said they made marketing investments, like in direct response partnerships and organic search methods, cost for the quarter was 220, and will continue to invest but be smart.

Q: Yields, where expecting yields to trend?

A: Todd said yields are expected to be stable to slightly increasing, with risk-based pricing approach for different segments based on credit risk.

Q: Average loan size, will it keep creeping up?

A: Pamela said it will incrementally creep up as the full rollout of larger loans hasn't been seen yet at the level they could be making them.

Q: Macro impact on credit, did jobs data reset cause rethinking growth?

A: Todd said they watch macro indicators but won't dynamically change model because of some macro indicator, but it informs them, and they have good early data to see cracks.

Q: Collections in 2Q?

A: Pamela said recoveries in Q2 2025 were $10.692 million compared to $8.4 million in Q2 2024.

Q: OpEx growth, how thinking about it?

A: Todd said they'll invest when needed, like in the LOLA system which is a great investment for the future.

Q: Capital allocation, updated thoughts?

A: Todd said they're exploring opportunities, looking at adjacent spaces like Earned Wage Access, and Pamela said they would consider stock repurchases if there's a mismatch between enterprise value and stock price.

Q: LOLA initiative rollout and success measure?

A: Todd said success is continuing to achieve current results and building upon them, with the ability to deploy new tools in all facets of the business.

Q: Guidance and seasonal distribution, any macro throwing off seasonal trends?

A: Todd said they think it's a pretty standard process with nothing out of the ordinary throwing off seasonal distribution