Oportun (OPRT) Q4 2025 Earnings Call Transcript

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DATE

Thursday, February 26, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Raul Vazquez
• Interim Chief Financial Officer, Treasurer, and Head of Capital Markets — Paul Appleton
• Head of Investor Relations — Dorian Hare

TAKEAWAYS

• GAAP Net Income -- $25,000,000 for 2025, including $3,400,000 in the fourth quarter, representing a $104,000,000 year-over-year improvement.
• Adjusted EPS -- $1.36 for 2025, up 89% from 2024, reaching the high end of the $1.30-$1.40 guidance range.
• Annualized Net Charge-Off Rate -- 12.3% in Q4 at the better end of management's guidance range.
• Originations Mix -- 74% of second-half originations from returning members versus 64% in the first half, reflecting a shift in credit posture.
• Operating Expenses -- $84,000,000 in Q4, $8,000,000 below management's prior guidance and the lowest quarterly spend since becoming a public company.
• Full-Year GAAP Operating Expenses -- $362,000,000 in 2025, down by $49,000,000 or 12% year over year, driven by reductions in technology and facilities spending, personnel, and G&A.
• Interest Expense -- $52,000,000 in Q4 excluding $5,500,000 debt extinguishment charges, $4,100,000 lower than Q3, and down 8% year over year after adjustments.
• ABS Issuance -- $485,000,000 ABS transaction completed post-Q4 at sub-6% funding cost and AAA rating, marking the fourth consecutive sub-6% ABS deal.
• Risk-Adjusted Net Interest Margin Ratio -- Improved 55 basis points year over year to 15.8% for 2025.
• Adjusted OpEx Ratio -- Decreased 109 basis points year over year to 12.7% of owned portfolio for 2025.
• Adjusted ROE -- Improved nearly 1,000 basis points to 17.5% for 2025.
• Credit Card Portfolio Sale -- $3,800,000 in prior-year Q4 revenue removed from comparison after portfolio sale in November, with transaction described as accretive on a cash basis.
• Secured Personal Loan (SPL) Originations -- Increased 51% in 2025; secured portfolio up 39% year over year to $226,000,000, 8% of owned portfolio at year end.
• SPL Loss Rate Advantage -- Secured personal loan losses over 600 basis points lower than unsecured personal loans.
• Delinquency Rate -- 30-plus delinquency rate 4.9% at year end, up 13 basis points year over year.
• Warehouse Capacity -- Increased from $954,000,000 to $1,140,000,000 in Q4; average margin reduced by 43 basis points; facility term extended to 25 months.
• Corporate Debt Reduction -- Outstanding corporate debt reduced by $70,000,000 (30%) in 2025, including a $37,500,000 Q4 repayment, yielding $10,500,000 annualized run-rate savings.
• Leverage Ratio -- Ended Q4 with 7.2 times debt to equity, down from 7.9 times prior year and Q3 2024 peak of 8.7 times.
• Unrestricted Cash -- Grew by $46,000,000 (76%) to $106,000,000 by year end, with total cash at $199,000,000.
• Q1 2026 Guidance -- Total revenue of $225,000,000 to $230,000,000; net charge-off rate of 12.65% ±15 bps; adjusted EBITDA $25,000,000-$30,000,000; expected Q1 delinquencies of 4.4%-4.5%, lower than both prior year and Q4.
• Full-Year 2026 Guidance -- Revenue of $935,000,000-$955,000,000; annualized net charge-off rate 11.9% ±50 bps; adjusted EBITDA $150,000,000-$165,000,000; adjusted EPS $1.50-$1.65; interest expense reduction>10%; flat operating expenses.
• Risk-Based Pricing Reintroduction -- Management is exploring risk-based pricing above 30% APR for select segments and expects only modest incremental profit from this in 2026.
• Leadership Transition -- Raul Vazquez announced he will step down as CEO and from the Board by April 3, 2026, and serve as adviser through July 3, with the Board in process of appointing a successor.

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RISKS

• CEO Vazquez said, "Q4 GDP growth was a bit lower than expected. Wage growth for the lowest quartile in the country is the lowest. Right? They do have the lowest wage growth right now. And then when we think about fuel, because we know fuel prices are something that our customer base is pretty sensitive to, although they are lower year over year, in the last month alone, we have seen fuel prices on average in the state of California go up $0.40 a gallon. You know? So that is one of the things that we are going to continue to watch carefully," recognizing macroeconomic headwinds for Oportun Financial Corporation's core customer base.
• Net revenue fell 3% year over year in Q4 due to lower total revenue and a higher net decrease in fair value, only partially offset by lower interest expense.
• Adjusted net income declined $8,600,000 year over year to $13,000,000 in Q4, primarily due to the wind-down of the Pathwood risk-sharing agreement.
• CEO Vazquez said, "We think that this elevated loss rate for Q1 is really just a product of the higher mix of new customers that we had at the beginning of the year. Right? We have been signaling this bubble. We talked about it in our last two earnings calls. So the trajectory of losses is what we expect. If anything, Q4 was on the low end of the guidance that we provided. So we have a lot of confidence when we look at delinquencies, going back to your question, looking at the path for delinquencies for Q1 that we will see loss start to come down in Q2, and then certainly in Q3 and Q4," indicating short-term elevated credit losses before expected moderation.

SUMMARY

Oportun Financial Corporation (NASDAQ:OPRT) achieved its fifth consecutive quarter of GAAP profitability, surpassing all management guidance metrics in 2025 amid substantial progress in credit quality, operating efficiency, and deleveraging. The company expanded secured personal loan origination and completed a fourth straight ABS issuance at sub-6% yields, strengthening liquidity and lowering funding costs. Management is reintroducing risk-based pricing above 30% APR for select segments and maintained a conservative credit posture for 2026 in response to ongoing macroeconomic headwinds. Executive leadership transition was announced, with CEO Raul Vazquez departing by April, and succession planning underway.

• Adjusted OpEx ratio reached a record low of 11.6% in Q4, outperforming the 12.5% target for the first time.
• Originations in Q4 were $495,000,000, down 5% year over year due to tighter credit, but above prior guidance for a high-single-digit decline.
• Shareholders’ equity increased by $36,000,000 (10%) in 2025, supporting continued deleveraging.
• Management’s 2026 unit economic goals include reducing net charge-offs to 9%-11%, lowering OpEx to 12.5% of the owned portfolio, and returning leverage to a 6-to-1 debt-to-equity ratio.

INDUSTRY GLOSSARY

• ABS: Asset-Backed Securities; pooled financial instruments backed by a portfolio of loans, used by lenders like Oportun Financial Corporation for funding.
• SPL: Secured Personal Loan; loans backed by collateral, in this context typically the member's automobile, with loss rates lower than unsecured loans.
• OpEx Ratio: Operating expenses expressed as a percentage of the owned loan portfolio, used as a benchmark for unit economics in lending businesses.
• Risk-Based Pricing: Lending practice of setting interest rates and terms based on assessed risk profile of the borrower, sometimes with APRs above regulatory thresholds.
• Delinquency Rate (30-plus): Percentage of loans in which payments are 30 days or more past due, used as an early indicator of future credit losses.

Full Conference Call Transcript

Dorian Hare: Thanks and hello, everyone. With me to discuss Oportun Financial Corporation's fourth quarter 2025 results are Raul Vazquez, Chief Executive Officer, and Paul Appleton, our Interim Chief Financial Officer, Treasurer, and Head of Capital Markets. I will 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 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.

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-K filing for the year ended 12/31/2025. 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.

Also on today's call, we will present both GAAP and non-GAAP financial measures, which we believe can be useful measures for 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 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 fourth quarter 2025 financial supplement, and the appendix section of the fourth quarter 2025 earnings presentation, all of which are 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 Raul Vazquez.

Raul Vazquez: Thanks, Dorian, and good afternoon, everyone. Thank you for joining us. Our fourth quarter results were strong. We met or exceeded all of our guidance metrics, reflecting continued operational discipline and strong execution across the business. The four key headlines from the quarter are sustained GAAP profitability, solid credit performance, ongoing expense discipline, and a reduced cost of capital. To start with profitability, we generated $25,000,000 of GAAP net income in 2025, including $3,400,000 in the fourth quarter. This capped a year of significantly enhanced profitability for Oportun Financial Corporation with full-year GAAP net income improving by $104,000,000 and adjusted EPS growing 89%.

These results were driven by growth in originations, improved credit performance, balance sheet optimization, and disciplined expense management. Turning to credit performance, our annualized charge-off rate was 12.3% in Q4 at the better end of the guidance range we provided. On the expense side, Q4 operating expenses of $84,000,000 came in below the $92,000,000 expectation set last quarter and marked our lowest quarterly spend as a public company. Driven by disciplined expense management, full-year 2025 GAAP operating expenses totaled $362,000,000, a $49,000,000 or 12% reduction from 2024. Finally, our balance sheet optimization initiatives are lowering our cost of capital and positioning us for stronger long-term returns.

Driven by corporate debt repayments as well as actions related to our ABS notes and warehouse facilities, Q4 interest expense excluding $5,500,000 of debt extinguishment costs was $52,000,000. That was $4,100,000 lower than Q3. We also completed a $485,000,000 ABS transaction earlier this month, marking our fourth consecutive issuance with a sub-6% funding cost and a AAA rating on the senior notes. Paul will further detail our balance sheet optimization initiatives and how they factor into our 2026 expectations. With our Q4 and full-year 2025 highlights covered, I will now review how we are executing against our three strategic priorities: improving credit outcomes, strengthening business economics, and identifying high-quality originations.

Starting with credit outcomes, as we discussed in our second quarter call, the first half of the year included a higher mix of new members than expected, so we shifted originations towards returning members. That adjustment was effective. 74% of second-half originations came from returning members, up from 64% in the first half. To further strengthen our risk management approach, we also introduced new early default models focused on new and returning members and added five new data sources into our underwriting process. In 2026, a key focus will be upgrading our decisioning infrastructure capabilities to accelerate model training and deployment, thereby enabling us to respond even faster to evolving credit conditions.

Turning to business economics, we continue to make strong progress on efficiency and operating leverage. During full-year 2025, our risk-adjusted net interest margin ratio improved 55 basis points year over year to 15.8%. As a reminder, that metric includes portfolio yield, net charge-offs, cost of capital, and loan-related fair value impacts. Our full-year 2025 adjusted OpEx ratio improved 109 basis points year over year to 12.7% of our owned portfolio. Together, these improvements drove strong operating leverage, lifting adjusted ROE by almost 1,000 basis points to 17.5%.

I am also pleased to share that we are advancing a new initiative designed to enhance our unit economics and progress towards 20% to 28% annual GAAP ROEs while expanding access to responsible credit. In partnership with potential new bank sponsors and warehouse providers, we are exploring the reintroduction of risk-based pricing above 30% APRs for select higher-risk segments on shorter-term loans. This creates a meaningful opportunity to extend our mission of financial inclusion by responsibly serving customers that we would otherwise not serve while better aligning pricing and term length with risk in order to improve portfolio returns.

At the same time, we are selectively testing modestly lower APRs for certain higher-quality returning members to maximize lifetime value where competitive dynamics warrant it. We are assuming only modest incremental profitability in 2026, as we roll this initiative out in a disciplined and measured manner. However, if executed successfully, we believe this initiative can drive higher earnings power in 2027 and beyond. Finally, on identifying high-quality originations, we grew originations by 10% during full-year 2025 while maintaining a conservative credit posture. We exceeded our prior expectation for high-single-digits percent growth by focusing on members with higher free cash flow and on channels that deliver the strongest results.

In full-year 2025, loan application growth more than doubled the rate of originations growth, while customer acquisition costs declined 6% to an average of $117, a testament to our strong loan demand, disciplined underwriting, and improved cost efficiency. And expanding our secured personal loans portfolio secured by members’ autos remains a key pillar of our responsible growth strategy. SPL originations increased 51% in full-year 2025. As a result, our secured portfolio grew 39% year over year to $226,000,000, and secured loans now represent 8% of our owned portfolio, up from 6% at year-end 2024. Importantly, secured personal loan losses were more than 600 basis points lower than unsecured personal loans during the year.

To continue our strong SPL growth momentum into 2026, we have recently initiated new direct mail campaigns targeted specifically at potential SPL customers who own their vehicles. By executing against our three strategic imperatives—improving credit outcomes, strengthening business economics, and identifying high-quality originations—we have driven meaningful operational and profit improvement in 2024 and 2025. We are confident this disciplined framework will continue to support our momentum in 2026. With that, I would like to now preview our initial 2026 outlook. While our member base remains resilient, inflation above Federal Reserve targets, declining wage growth, uneven job creation, and policy uncertainty continue to create a cautious environment for low- to moderate-income consumers.

Our outlook prudently assumes these conditions persist throughout 2026, alongside our currently tight credit posture. We remain well positioned to adjust quickly as conditions evolve. The guidance for full-year 2026 that Paul will soon detail for you is underpinned by mid-single-digits originations growth, a 1% to 2% decline in average daily principal balance, revenue growth ranging from flat to a 2% decline, a net charge-off rate range with a midpoint reflecting slight year-over-year improvement, a reduction in interest expense of at least 10%, and substantially flat operating expenses. We expect these drivers to result in full-year 2026 adjusted EPS growth of 16% at the midpoint of our full-year guidance.

We also expect higher profitability in the second half than the first, as originations ramp under our normal seasonal pattern and loss rates improve. I will now turn the call over to Paul Appleton for additional details on our financial and credit performance as well as our guidance.

Paul Appleton: Thanks, Raul, and good afternoon, everyone. Turning to Slide five, we delivered a strong fourth quarter relative to guidance. Identifying high-quality originations enabled us to exceed the top end of our quarterly total revenue guidance by $1,700,000 or 1%. Combined with disciplined expense management, this drove strong adjusted EBITDA of $42,000,000, exceeding the top of our guidance range by $5,500,000 or 15%. For full-year 2025, we delivered adjusted EPS of $1.36 towards the high end of the $1.30 to $1.40 expectation and achieved GAAP profitability of $25,000,000, consistent with our full-year GAAP profitability commitment. Turning now to Slide six, we recorded our fifth consecutive quarter of GAAP profitability with net income of $3,400,000 and diluted EPS of $0.07.

We also generated adjusted net income of $13,000,000 and adjusted EPS of $0.27. While maintaining credit discipline, fourth-quarter originations of $495,000,000 were down 5% year over year, primarily due to credit tightening actions. This was modestly better than our prior expectation for a high-single-digit decline. Total revenue of $248,000,000 declined by $3,200,000 or 1% year over year. This decline was attributable to the absence of $3,800,000 of credit card revenue in the prior-year quarter. As a reminder, we completed the sale of our credit card portfolio in November, a transaction that has been accretive on a cash basis. Net decrease in fair value was $99,000,000 this quarter, due primarily to $86,000,000 in net charge-offs.

Also included in the decrease in Q4 fair value was $17,000,000 of derivative-related impacts in line with our expectations associated with the acquisition of an Oportun Financial Corporation-serviced loan portfolio and the wind-down of our related risk-sharing agreement. The majority, $13,000,000, was non-cash. As we discussed on our prior earnings call, these loans were previously held by our bank sponsor, Pathwood. We continue to expect a profitability benefit from the acquisition, driven by lower funding costs associated with owning the portfolio versus the prior arrangement with Pathwood. We also expect derivative-related fair value impacts to be muted in the first quarter, and following the wind-down, to no longer affect fair value in future quarters.

Partially offsetting the impact of the lock-down, sustained lower ABS funding costs drove a favorable $4,900,000 mark-to-market adjustment on our loan portfolio. Reported fourth-quarter interest expense was $58,000,000, down $16,000,000 year over year. After adjusting for debt repayment-related charges of $17,000,000 in the prior-year quarter and $5,500,000 in Q4 2025, interest expense declined $4,600,000 or 8% year over year. This improvement reflects the balance sheet optimization initiatives Raul referenced earlier, which I will detail momentarily. Net revenue was $90,000,000, down 3% year over year, as the impact of lower total revenue and a higher net decrease in fair value offset lower interest expense.

Operating expenses were $84,000,000, down $5,600,000 or 6% year over year, better than our $92,000,000 expectation and reflecting continued cost discipline. Our adjusted OpEx ratio reached a record low of 11.6%, marking the first time we have outperformed our 12.5% unit economics target. Importantly, as we work toward meeting our unit economics targets on a GAAP basis, our GAAP OpEx ratio improved to 12%, down from 13.1% in the prior-year quarter, and also outperformed our target. Adjusted EBITDA, which excludes the impact of fair value mark-to-market adjustments on our loan portfolio and notes, was $42,000,000 in the fourth quarter.

This reflected a year-over-year increase of $1,500,000,000 as lower operating expenses and interest expense more than offset higher net charge-offs and lower total revenue. Adjusted net income, which excludes the debt repayment-related charges discussed earlier, was $13,000,000, down $8,600,000 year over year, primarily due to the wind-down of the Pathwood risk-sharing agreement I discussed earlier. Adjusted EPS similarly declined year over year from $0.49 to $0.27. Importantly, GAAP net income before taxes was $6,600,000, up $2,700,000 or 68% year over year, as lower operating expenses more than offset lower net revenue. GAAP net income was $3,400,000 and would have been higher absent repayment-related charges and the tax headwinds this quarter.

The $5,300,000 year-over-year decline in GAAP net income was largely attributable to the tax comparison, as this quarter reflected $3,200,000 of tax expense versus a $4,800,000 benefit in Q4 2024 due to discrete items and R&D credit timing. Diluted EPS of $0.07 declined by $0.13 year over year. Next, I would like to provide some additional color on our credit performance in Q4. As shown on Slide seven, our Q4 net charge-off rate increased as anticipated, coming in at 12.3% at the low end of the annualized guidance we provided. As expected, the higher-loss pre-July 2022 back book continued to roll off, shrinking to less than 1% of our owned portfolio at year end.

Our 30-plus delinquency rate was 4.9%, up a modest 13 basis points year over year. As a forward-looking indicator, this supports our expectation that 1Q 2026 will represent the peak quarterly net charge-off rate for the year, with moderation beginning in the second quarter. Turning now to capital and liquidity, as shown on Slide nine, we continue to strengthen our debt capital structure by reducing higher-cost corporate debt, lowering our overall cost of capital, and enhancing liquidity. First, I am pleased with the progress we have made in deleveraging, ending Q4 2025 at 7.2 times debt to equity. That is down from 7.9 times a year ago and from the 3Q24 peak of 8.7 times.

During 2025, shareholders’ equity increased by $36,000,000 or 10%, with consistent GAAP profitability supporting continued deleveraging. Reducing our high-cost corporate debt, which carries a 15% interest rate, remains our second-highest capital priority after originating high-quality loans and reinvesting in the business. Since the $235,000,000 corporate debt facility was put in place in November 2024, we have reduced the outstanding balance by $70,000,000 or 30%, including $37,500,000 or 16% in Q4. These repayments lowered our annualized run-rate expense by $10,500,000, generating meaningful and sustainable savings. During Q4, we increased total committed warehouse capacity from $954,000,000 to $1,140,000,000.

We also extended the weighted average remaining term of our combined warehouse facilities from 17 months to 25 months and reduced the aggregate weighted average margin by 43 basis points. We achieved this by closing a new $247,000,000 three-year revolving term committed warehouse facility and improving the terms of our existing facilities. Following the fourth quarter, and early this month, as Raul mentioned, we completed a $485,000,000 ABS transaction at a 5.32% weighted average yield. In the last nine months, we have now raised $1,900,000,000 in the ABS market at sub-6% yields, demonstrating sustained access to capital on favorable terms. In addition, reducing high-cost corporate debt by $70,000,000 during 2025, we increased our unrestricted cash balance by $46,000,000 or 76%.

As of December 31, total cash was $199,000,000, of which $106,000,000 was unrestricted and $93,000,000 was restricted. Turning now to our guidance, as shown on Slide 12, our outlook for the first quarter is total revenue of $225,000,000 to $230,000,000, annualized net charge-off rate of 12.65% plus or minus 15 basis points, and adjusted EBITDA of $25,000,000 to $30,000,000. At the midpoint, our Q1 revenue guidance implied an $8,000,000 year-over-year decline, reflecting seasonally lower demand during tax season and our continued tight credit posture.

Our Q1 annualized net charge-off rate midpoint guidance of 12.65% reflects the impact of first half 2025 originations, which included a high percentage of new members prior to the timing actions we implemented in the second half. We expect first quarter 2026 delinquencies to decrease to 4.4% to 4.5%, which would be 20 to 30 basis points lower than 1Q 2025 and 40 to 50 basis points lower sequentially than 4Q 2025. That anticipated improvement in delinquencies gives us confidence that charge-offs will decrease beginning in the second quarter.

Importantly, our implied net charge-off guidance for the remaining three quarters of 2026 is approximately 11.65%, which is 100 basis points lower than the first quarter guidance midpoint, reflecting the impact of our tightened underwriting and improved mix. At the midpoint, our Q1 adjusted EBITDA guidance implies a year-over-year decline of approximately $6,000,000, less than the expected revenue decline of million dollars driven by lower operating and interest expense. Our initial full-year 2026 guidance includes total revenue of $935,000,000 to $955,000,000, annualized net charge-off rate of 11.9% plus or minus 50 basis points, adjusted EBITDA of $150,000,000 to $165,000,000, and adjusted EPS of $1.50 to $1.65.

We expect to lower interest expense by more than 10% in 2026, which supports our adjusted EPS guidance. We are confident in this expectation because the benefits of the balance sheet optimization initiatives completed in 2025 will flow through to our 2026 financials. 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 Raul, let me briefly review our unit economics progress for full-year 2025. Although our long-term targets are GAAP targets, I will reference adjusted metrics because they remove non-recurring items and better reflect our future run rate.

As shown on Slide 11, we made meaningful progress during the year. Full-year 2025 adjusted ROE was 17.5%, nearly a 10 increase year over year, driven primarily by cost reductions and improved credit performance. We expect to build on this progress in 2026. Our North Star remains delivering GAAP ROEs of 20% to 28% annually. We plan to achieve this by reducing annualized net charge-offs to 9% to 11%, lowering operating expenses to 12.5% of our owned portfolio, and attaining 10% to 15% annual growth in our owned loan portfolio. We also intend to make substantial progress towards returning to our target six-to-one debt-to-equity leverage ratio this year by reducing our debt outstanding and continuing to grow profitability.

With that, Raul, back over to you.

Raul Vazquez: To close, I would like to emphasize three key points. First, we are pleased with our 2025 results. On a full-year basis, we improved GAAP net income by $104,000,000 and grew adjusted EPS by 89%. Second, we expect full-year profitability to improve across all metrics in 2026. Although the additional credit tightening implemented in the second half of last year is expected to temper revenue growth in 2026, we still project 10% to 21% adjusted EPS growth per our guidance, improved ROE, and higher GAAP profitability year over year. And third, we see a compelling long-term opportunity ahead for Oportun Financial Corporation.

The progress we have made over the past year in reducing leverage, lowering our cost of capital, and strengthening our liquidity enables us to focus squarely on operational execution and profitable, sustainable growth. For 2026, we are assuming only modest incremental profit from the risk-based pricing initiatives discussed earlier as we roll them out prudently. However, if executed successfully, a return to risk-based pricing could enhance earnings growth beginning in 2027 and drive additional progress towards our 20% to 28% GAAP ROE objective over time. This will be my final earnings call as CEO of Oportun Financial Corporation.

I will step down as Chief Executive Officer and from the Board by April 3, or earlier if the Board appoints a successor. Following that, I will serve as an adviser through July 3 to support a smooth transition. I will continue meeting with investors this quarter and have worked closely with the Board and management team to ensure an orderly and seamless leadership transition. It has been a privilege to lead Oportun Financial Corporation for nearly fourteen years and to work alongside such a talented, committed, and mission-driven team. I am deeply grateful to our employees, members, partners, and shareholders for the trust and support they have shown me throughout this journey.

I am confident that Oportun Financial Corporation is well positioned for its next chapter with a strong foundation, a clear strategy, and a team fully capable of continuing to deliver for our members and shareholders. We will now open for questions. With that, operator, let us open up the line for questions. Thank you.

Operator: And the first question comes from the line of Kyle Joseph with Stephens. Please proceed.

Raul Vazquez: Hi, Kyle. How are you? The line is live. Kyle, you may have us on mute. We cannot hear you. Operator, could we go to the next question, please?

Operator: The next question will come from the line of David Scharf with Citizens. Please proceed.

Zach (for David Scharf): Hey, guys. This is Zach on for David. Congrats on the strong fourth quarter performance. I want to dig in a little bit on the macro side and see if we can get any more color and also just kind of if you can kind of talk about any of the signs we might see, you know, that might lead to some listing.

Raul Vazquez: Thank you. Sure. Sure, Zach. So when we think about the macro, right, we think that the consumer, first of all, is showing a tremendous amount of resilience. So that has us, you know, optimistic as we go into the year. From a macro perspective, we certainly know that tax refunds are expected to be bigger this year. So far, our delinquency performance at the beginning of the year makes us feel good about what the path for loss is going to continue to be, so we think that is constructive. On the flip side, right, Q4 GDP growth was a bit lower than expected. Wage growth for the lowest quartile in the country is the lowest. Right?

They do have the lowest wage growth right now. And then when we think about fuel, because we know fuel prices are something that our customer base is pretty sensitive to, although they are lower year over year, in the last month alone, we have seen fuel prices on average in the state of California go up $0.40 a gallon. You know? So that is one of the things that we are going to continue to watch carefully. So I think on the macro side, Zach, there are some puts and takes. And as a consequence, right, we continue to have a conservative credit box until we see things improve.

To your point, in terms of improvement, we would like to see stronger job growth across the economy. We would like to see continued GDP growth. We would like to see a strong finish to the tax season. And then obviously, we want to see the trajectory that we expect for losses to develop. Those are the sorts of things that would be required to see to up.

Zach (for David Scharf): Got it. Thank you.

Raul Vazquez: Thank you, Zach.

Operator: The next question comes from the line of Brendan McCarthy with Sidoti. Please proceed.

Brendan McCarthy: Great. Good afternoon, Raul. Good afternoon, Paul. I appreciate you taking my questions here.

Raul Vazquez: Hi, Brendan.

Brendan McCarthy: Hey. Just wanted to start off on the net charge-off rate. Obviously, it looks like a temporary step-up in the first quarter, and then it will step down in the second quarter and thereafter. Just curious as to what data points you are seeing regarding first-payment defaults or the new origination vintages that really give you that confidence that it will step down like that.

Raul Vazquez: Yeah. The biggest signal in terms of the losses going down is really what we are seeing in delinquencies. So right now, based on what we are seeing in delinquencies—and 30-plus delinquencies specifically, but early delinquencies also look good, Brendan—but on the 30-plus side, we think we are going to end up at 4.4% to 4.5% for Q1. That would be 20 to 30 basis points lower than last year and 40 to 50 basis points lower quarter over quarter. We think that this elevated loss rate for Q1 is really just a product of the higher mix of new customers that we had at the beginning of the year. Right? We have been signaling this bubble.

We talked about it in our last two earnings calls. So the trajectory of losses is what we expect. If anything, Q4 was on the low end of the guidance that we provided. So we have a lot of confidence when we look at delinquencies, going back to your question, looking at the path for delinquencies for Q1 that we will see loss start to come down in Q2, and then certainly in Q3 and Q4. You did see that the implied loss rate for Q2 to Q4 is 11.65%. And, again, the confidence really comes from what we are seeing in delinquencies so far this year.

Brendan McCarthy: Great. I appreciate the detail there, Raul. And another question here on operating expenses. I think you guided to flat OpEx for 2026 relative to 2025. I am curious if you can differentiate the Q4 run rate, which would be a little bit lower if you took that and annualized it for 2026. Just wondering what increases are kind of baked into that from the Q4 run rate?

Raul Vazquez: Yes. So I would say from an OpEx perspective, when we look at 2026, there are really two things going on. Number one, I am really proud of the discipline that the team showed throughout all of 2025 and certainly in Q4. And that discipline continues this year. We are going to continue to look for opportunities to reduce OpEx. We are going to continue to stay pretty lean from a headcount perspective. So that part is going to continue, and that is the first part of the OpEx story. The reason that OpEx looks flat is really the second dimension, which is there are going to be some incremental investments relative to 2025.

And we think these are investments that investors are going to be excited about. Number one, we are going to be investing in this return to risk-based pricing, right, specifically pricing over 36%. As a reminder for people that may be newer to the Oportun Financial Corporation story, the bulk of our history, we have pricing over 36%. Right? The bulk of my time even as CEO these last fourteen years, we were pricing a part of the portfolio over 36%. So this is not new to us. This is something we know how to do. It is the same Chief Credit Officer. So in many ways, this is returning to the pricing that we had before.

But this is going to require engaging a new bank partner. It is going to require some new development and just some new investment. But, again, we are excited about the impact that is going to have. Though modest this year, we think it will lead to a bigger impact in 2027 and the years beyond that. So that is one investment. Number two, secured personal lending continues to be our major focus from a growth perspective. We shared that originations this last year were 51% year-over-year growth in originations for SPL. Right? This year, we have said we are going to have kind of mid-single-digit growth in the business.

That means growth both in UPL, but more importantly, disproportionate growth rates in SPL. So we continue to invest in that part of the business, Brendan. And then number three, you know, I just answered Zach’s question in terms of what we would need to see to open up the credit box. We are going to see growth in the portfolio this year, in particular. That will not be through opening the credit box. It will be through investing in marketing. I am sorry, growth in originations, in particular Q2 through Q4. So that is another investment that you are seeing.

So the net-net of the savings we expect to find plus those three investments means relatively flat OpEx for the year.

Brendan McCarthy: Understood. I appreciate the color there. And I think that is a key takeaway. You are planning to go above that 36% cap. Can you give us a sense of how this might increase your addressable market and is that plan included in your expectation for mid-single-digit growth in originations for the year?

Raul Vazquez: It is not included in our view for this year. For this year, we are going to take a very methodical, very prudent approach to rolling this out. Again, we know how to do this. This is not new to us. But certainly, right, this is a different environment than a few years ago when we stopped doing this. So we think it is prudent to roll this out in a thoughtful way. Certainly, as we get into 2027 and future years, we think there are two big benefits here, Brendan. One is certainly over time, to your point, it should open up some additional market for us.

And our ability to price appropriately for that slightly higher risk is going to improve our unit economics and is going to improve the overall profitability of the business, so we are excited about that. What we also used to do, and this is contemplated in our plans, is we would price the best part of our portfolio slightly below 36%. And if someone came back as a returning borrower, they would get the benefit of good performance by having lower pricing.

We think not only does that max lifetime value because it allows us to go ahead and retain those individuals, but by marketing price points below 36%, it also changes the through-the-door population and the applicant quality that we see. So that way you see an overall benefit from a credit quality perspective. We think that part of the business, the pricing below the 36%, is also accretive to the business. And that is why we are so excited. Although the benefits would be muted this year, we are very excited about this initiative, and I have got a ton of confidence in this leadership team’s ability to execute the plan well both this year and in future years.

Brendan McCarthy: That is great. I appreciate the color there, Raul. That is all for me.

Raul Vazquez: Thank you for the follow-up question, Brendan.

Operator: The next question comes from the line of Hal Goetsch with B. Riley Securities. Please proceed.

Hal Goetsch: Hey, Raul. I just wanted to thank you for your service to the company and to investors. Thank you very much. I think you had a tremendous run there from start-up to a public company. Congratulations. You are going to be missed. And my question is, can you go into a little more detail on the expense reduction? Seems like it was particularly good and, you know, what did you see there that allowed you to do that this quarter? And the question is, you know, what are the goals for, yeah, maybe corporate debt reduction in 2026? Thanks.

Raul Vazquez: Yeah. So let me start, Hal, by saying thank you for the very kind words. Shareholders are in great hands with this leadership team. Like I said, I have got a ton of confidence in them, but I appreciate your kind words. On the OpEx side, I am going to focus on the full year, right, because the story, right, from a full-year perspective was very compelling. Right? OpEx was down $49,000,000 or 12% on a year-over-year basis. And, really, what we saw were contributions almost across all areas, Hal. From a tech and facilities perspective, that is the largest part of our OpEx. That was down $24,000,000 year over year or 14%.

That is really efficiencies in our technology spend. It is really cutting, right, the size of that group so that way, also, some of the charges that come over time with that also decrease. But a lot of good work there. I know the tech team is going to continue to look for opportunities, right, both to get leaner as we continue to use AI—and that would be leaner through attrition, just to be clear—but also opportunities to try to figure out if we can lessen the number of contracts or just reduce the expense associated with some of the multi-year contracts that are coming up next year.

On the personnel side, right, we have certainly gotten much leaner, as people know, over the years, and reduced the size of headcount. So personnel for the year was down about $7,000,000 or 8%. G&A was down $9,000,000 or 36%. And then outservicing was also down about $2,000,000. So really a ton of discipline and focus across all parts of the business. As I was answering the question in terms of OpEx earlier, right, those reductions still gave us an opportunity to self-fund some improvement, some increase in sales and marketing. So sales and marketing for the year was up $4,000,000 or 5%. Right?

The bulk of that investment was in the areas that we have talked about throughout the year, both direct mail and a really, really healthy customer referral program that we are very pleased with. So that is really what the picture looked like for 2025. And we will seek to do something similar in 2026. Right? It is obviously harder to continue to reduce some of those numbers at the same magnitude. We will continue to look for reductions across the areas I just mentioned and then some modest investment in marketing.

Hal Goetsch: Perfect. And then remind me, I am sorry, the second part of your question. Oh, yeah. What would you—we have a goal for debt reduction this year after a tremendous, you know, last year and a half or so.

Raul Vazquez: Yeah. So on the debt reduction side, from a capital allocation perspective, our priorities are still, number one, fund profitable growth. Number two, pay down the debt, in particular, the 15% interest rate corporate facility. We made a lot of progress last year. We did $70,000,000 in payments last year, including $37,500,000. That does impact GAAP profitability because there are some repayment charges. So our GAAP net income would have been even higher if not for the $5,500,000 or so of debt repayment charges in the quarter. We do have additional payments contemplated in the plan by quarter. We will certainly talk more about those every time that we have an earnings call, Hal.

Give you an update on how much did we pay down. But the plan does include that. And, in fact, GAAP net income would be even higher this year if not for some of those debt repayment charges that we have to recognize. So, yes, you will continue to see us pay down that debt as aggressively as possible.

Paul Appleton: Thank you.

Operator: Thank you, Hal. As a reminder, there appear to be no further questions. So we want to thank you once again for joining today’s call. We appreciate your continued interest in Oportun Financial Corporation. And the team looks forward to speaking with you again soon. Thank you, everyone.

Operator: This concludes today’s conference. You may disconnect your lines at this time. And we thank you for your participation.

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