OppFi Inc. (OPFI) FY 2024 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Concerning Factors That May Affect Future Results” and “Risk Factors” of this Form 10-K for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described or implied by the forward-looking statements contained in the following discussion and analysis.
OVERVIEW
OppFi is a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans. The Company’s platform powers banks to offer accessible lending products through its proprietary technology and top-rated customer experience. OppFi’s primary mission is to facilitate financial inclusion and credit access to the 60 million everyday Americans who face credit insecurity with digital specialty finance products and an unwavering commitment to its customers.
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OppFi works with banks to facilitate short-term credit options for everyday Americans who lack access to mainstream financial products. OppFi’s specialty finance platform focuses on helping these consumers rebuild their financial health. Customers on OppFi’s platform benefit from a highly automated, transparent, efficient, and fully digital experience. The banks that work with OppFi benefit from its turn-key, outsourced marketing, data science, and proprietary technology to digitally acquire, underwrite, and service these consumers.
OppFi’s primary products are offered by its OppLoans platform. Customers on this platform are U.S. consumers who are employed, have bank accounts, and generally earn median wages. The average installment loan facilitated by OppFi is approximately $1,750, payable in installments and with an average contractual term of 11 months. Neither SalaryTap nor OppFi Card contributed meaningfully to OppFi’s results during the year ended December 31, 2024.
OppFi also holds 35% of the outstanding equity securities of Bitty Holdings, LLC (“Bitty”), a credit access company that offers revenue-based financing and other working capital solutions to small businesses.
On the Closing Date, OppFi completed the Business Combination. At the Closing, FGNA changed its name to “OppFi Inc.” OppFi’s Class A Common Stock and Public Warrants are listed on the NYSE under the symbols “OPFI” and “OPFI WS,” respectively.
Unless the context otherwise requires, all references in this section to “OppFi” or the “Company” refer OppFi-LLC and its subsidiaries prior to the Closing, or to OppFi Inc. and its subsidiaries from and after the Closing. See Item 1. “Business” for more information.
HIGHLIGHTS
Our financial results as of and for the year ended December 31, 2024 are summarized below:
•Basic and diluted earnings per share (“EPS”) of $0.36 for the year ended December 31, 2024;
•Adjusted earnings per share (“Adjusted EPS”)(1) of $0.95 for the year ended December 31, 2024 an increase of $0.46 from $0.49 for the year ended December 31, 2023;
•Net originations increased 7.2% to $801.5 million from $747.8 million for the years ended December 31, 2024 and 2023, respectively;
•Ending receivables increased 2.1% to $425.2 million from $416.5 million as of December 31, 2024 and 2023, respectively;
•Total revenue increased 3.3% to $526.0 million from $508.9 million for the years ended December 31, 2024 and 2023, respectively;
•Net income of $83.8 million for the year ended December 31, 2024, an increase of $44.4 million from $39.5 million for the year ended December 31, 2023; and
•Adjusted net income (“Adjusted Net Income”)(1) of $82.7 million for the year ended December 31, 2024, an increase of $41.2 million from $41.5 million for the year ended December 31, 2023.
(1) Adjusted EPS and Adjusted Net Income, non-GAAP financial measures, were not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). For information regarding our uses and definitions of these financial measures and for reconciliations to the most directly comparable GAAP financial measures, see the section titled “Non-GAAP Financial Measures” below. Beginning with the quarter ended March 31, 2024, for all periods presented, we have updated our presentation and calculation of Adjusted EBT, and corresponding presentations and calculations of Adjusted Net Income and Adjusted EPS, to no longer add back debt issuance cost amortization.
Share Repurchase Program
On April 4, 2024, the Board authorized a new share repurchase program to repurchase up to $20.0 million in the aggregate of shares of our Class A Common Stock (the “Repurchase Program”). The Repurchase Program will expire in April 2027. During the year ended December 31, 2024, OppFi repurchased 1,034,710 shares of Class A Common Stock, which were held as treasury stock as of December 31, 2024, for an aggregate purchase price of $3.6 million at an average purchase price per share of $3.41. As of December 31, 2024, $16.4 million of the repurchase authorization under the Repurchase Program remained available.
Bitty Purchase Agreement
On July 31, 2024, we entered into a Securities Purchase Agreement, dated as of July 31, 2024 (the “Securities Purchase Agreement”), to acquire 35% of the outstanding equity securities of Bitty, a credit access company that offers revenue-based financing and other working capital solutions. The acquisition closed on July 31,2024 (the “Acquisition Date”). The aggregate
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consideration paid in connection with the acquisition consisted of (i) a cash payment of approximately $15.2 million and (ii) 734,851 OppFi Units, valued at approximately $2.8 million.
Pursuant to the Securities Purchase Agreement, one of our subsidiaries has (a) the right to purchase an additional 30% of the outstanding equity securities of Bitty within a specific time period from the date that is three years from the Acquisition Date, and (b) the right to purchase all of the remaining equity securities of Bitty within a specific time period from the date that is six years from the Acquisition Date.
For further details, see Note 1 to the Consolidated Financial Statements, “Description of Business and Significant Accounting Policies.”
KEY PERFORMANCE METRICS
We regularly review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions, which may also be useful to an investor. The following tables and related discussion set forth key financial and operating metrics for the Company’s operations as of and for the years ended December 31, 2024 and 2023.
The key performance metrics presented are for the OppLoans product only and exclude the SalaryTap and OppFi Card products.
Total Net Originations
We measure originations to assess the growth trajectory and overall size of our loan portfolio. There is a direct correlation between origination growth and revenue growth. We include both bank partner originations as well as those originated by us directly. Loans are considered to be originated when the contract is signed between us and the prospective borrower. The vast majority of our originations ultimately disburse to a borrower, but disbursement timing lags that of originations.
The following table presents total net originations (defined as gross originations net of transferred balance on refinanced loans), total retained net originations (defined as the portion of total net originations as defined above with respect to which the Company ultimately purchased a receivable from bank partners or originated directly), percentage of net originations by bank partners, and percentage of net originations by new loans for the years ended December 31, 2024 and 2023 (in thousands):
| Year Ended December 31, | Change | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | $ | % | ||||||||||
| Total net originations | $ | 801,514 | $ | 747,839 | $ | 53,675 | 7.2 | % | |||||
| Total retained net originations | $ | 732,799 | $ | 723,369 | $ | 9,430 | 1.3 | % | |||||
| Percentage of net originations by bank partners | 100.0 | % | 97.7 | % | N/A | 2.4 | % | ||||||
| Percentage of net originations by new loans | 44.0 | % | 43.6 | % | N/A | 0.8 | % |
Total net originations increased to $801.5 million for the year ended December 31, 2024 from $747.8 million for the year ended December 31, 2023. The 7.2% increase was a result of bank partners’ expansion into additional states, increased demand through certain marketing partners, and enhanced lead evaluation capabilities driving higher quality applications. Total retained net originations increased to $732.8 million for the year ended December 31, 2024 from $723.4 million for the year ended December 31, 2023. The 1.3% increase for the year ended December 31, 2024 was a result of the originations growth outpacing the growth in the percentage of loans retained by our bank partners.
Total net originations by our bank partners increased to 100.0% for the year ended December 31, 2024 from 97.7% for the year ended December 31, 2023. During the third quarter of 2023, the Company ceased directly originating loans and transitioned completely to a servicing / facilitation model for bank partners.
Total net originations of new loans as percentage of total loans increased to 44.0% for the year ended December 31, 2024 from 43.6% for the year ended December 31, 2023. The increase is a result of accelerating growth from our bank partners’ expansion into additional states, increased demand through certain marketing partners, and enhanced lead evaluation capabilities driving higher quality applications.
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Ending Receivables
Ending receivables are defined as the unpaid principal balances of loans at the end of the reporting period. The following table presents ending receivables as of December 31, 2024 and 2023 (in thousands):
| As of December 31, | Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | $ | % | ||||||||||||
| Ending receivables | $ | 425,240 | $ | 416,463 | $ | 8,777 | 2.1 | % |
Ending receivables increased to $425.2 million as of December 31, 2024 from $416.5 million as of December 31, 2023. The 2.1% increase was primarily driven by a higher receivables balance to begin the year in 2024 relative to 2023, growth in retained net originations year over year, and a healthier portfolio leading to fewer charge-offs year over year.
Average Yield
Average yield represents total revenue from the period as a percent of average receivables. Receivables are defined as the unpaid principal balances of loans. The following table presents average yield for the years ended December 31, 2024 and 2023:
| Year Ended December 31, | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % | |||||||
| Average yield | 131.4 | % | 127.3 | % | 3.3 | % |
Average yield increased to 131.4% for the year ended December 31, 2024 from 127.3% for the year ended December 31, 2023. The 3.3% increase was driven by a decrease in delinquent loans in the portfolio that were not accruing interest throughout the period as well as an increase in the average statutory rate due to the introduction of pricing initiatives throughout 2024 and a relative shift away from states with lower interest rates.
Net Charge-Offs as a Percentage of Total Revenue and Net Charge-Offs as a Percentage of Average Receivables
Net charge-offs as a percentage of total revenue and net charge-offs as a percentage of average receivables represent total charge-offs from the period less recoveries as a percentage of total revenue and as a percentage of average receivables. Receivables are defined as the unpaid principal balances of loans. Our charge-off policy is based on a review of delinquent finance receivables on a loan-by-loan basis. Finance receivables are charged off at the earlier of the time when accounts reach 90 days past due on a recency basis, when we receive notification of a customer bankruptcy, or when finance receivables are otherwise deemed uncollectible.
The following table presents net charge-offs as a percentage of total revenue and as a percentage of average receivables for the years ended December 31, 2024 and 2023:
| Year Ended December 31, | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % | |||||||
| Net charge-offs as % of total revenue | 39.1 | % | 43.5 | % | (10.1) | % | |||
| Net charge-offs as % of average receivables | 51.4 | % | 55.4 | % | (7.2) | % |
Net charge-offs as a percentage of total revenue decreased to 39.1% for the year ended December 31, 2024 from 43.5% for the year ended December 31, 2023. The decrease in net charge-offs as a percentage of total revenue for the year ended December 31, 2024 is a result of a higher yielding portfolio for the reasons discussed above in “Average Yield” combined with both lower gross charge-offs and higher recoveries driving lower levels of net charge-offs compared to the year ended December 31, 2023. Net charge-offs as a percentage of average receivables decreased to 51.4% for the year ended December 31, 2024 from 55.4% for the year ended December 31, 2023. The decrease in net charge-offs as a percentage of average receivables for the year ended December 31, 2024 is a result of both lower gross charge-offs and higher recoveries driving lower levels of net charge-offs compared to the year ended December 31, 2023.
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Auto-Approval Rate
Auto-approval rate is calculated by taking the number of approved loans that are not decisioned by a loan processor or underwriter (auto-approval) divided by the total number of loans approved. The following table presents auto approval rate for the years ended December 31, 2024 and 2023:
| Year Ended December 31, | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % | |||||||
| Auto-approval rate | 76.5 | % | 71.9 | % | 6.3 | % |
Auto-approval rate increased by 6.3% for the year ended December 31, 2024 to 76.5% from 71.9% for the year ended December 31, 2023, driven by the continued application of algorithmic automation projects that streamline frictional steps of the origination process.
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RESULTS OF OPERATIONS
Comparison of the years ended December 31, 2024 and 2023
The following table presents our consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands, except share and per share data). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
| Year Ended December 31, | Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | $ | % | ||||||||||||
| Interest and loan related income | $ | 521,227 | $ | 505,430 | $ | 15,797 | 3.1 | % | |||||||
| Other revenue | 4,736 | 3,519 | 1,217 | 34.6 | |||||||||||
| Total revenue | 525,963 | 508,949 | 17,014 | 3.3 | |||||||||||
| Change in fair value of finance receivables | (204,443) | (231,419) | 26,976 | (11.7) | |||||||||||
| Provision for credit losses on finance receivables | (42) | (4,348) | 4,306 | (99.0) | |||||||||||
| Net revenue | 321,478 | 273,182 | 48,296 | 17.7 | |||||||||||
| Expenses: | |||||||||||||||
| Sales and marketing | 41,341 | 46,222 | (4,881) | (10.6) | |||||||||||
| Customer operations(a) | 47,023 | 46,362 | 661 | 1.4 | |||||||||||
| Technology, products, and analytics | 35,639 | 39,161 | (3,522) | (9.0) | |||||||||||
| General, administrative, and other(a) | 58,231 | 48,332 | 9,899 | 20.5 | |||||||||||
| Total expenses before interest expense | 182,234 | 180,077 | 2,157 | 1.2 | |||||||||||
| Interest expense | 44,708 | 46,750 | (2,042) | (4.4) | |||||||||||
| Total expenses | 226,942 | 226,827 | 115 | 0.1 | |||||||||||
| Income from operations | 94,536 | 46,355 | 48,181 | 103.9 | |||||||||||
| Change in fair value of warrant liabilities | (8,244) | (4,976) | (3,268) | 65.7 | |||||||||||
| Income from equity method investment | 1,442 | — | 1,442 | — | |||||||||||
| Other income | 318 | 431 | (113) | (26.2) | |||||||||||
| Income before income taxes | 88,052 | 41,810 | 46,242 | 110.6 | |||||||||||
| Income tax expense | 4,215 | 2,331 | 1,884 | 80.8 | |||||||||||
| Net income | 83,837 | 39,479 | 44,358 | 112.4 | |||||||||||
| Less: net income attributable to noncontrolling interest | 76,579 | 40,484 | 36,095 | 89.2 | |||||||||||
| Net income (loss) attributable to OppFi Inc. | $ | 7,258 | $ | (1,005) | $ | 8,263 | 821.8 | % | |||||||
| Earnings (loss) per share attributable to OppFi Inc.: | |||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||
| Basic | $ | 0.36 | $ | (0.06) | |||||||||||
| Diluted | $ | 0.36 | $ | (0.06) | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 20,145,606 | 16,391,199 | |||||||||||||
| Diluted | 20,145,606 | 16,391,199 | |||||||||||||
| (a) Beginning with the quarter ended March 31, 2024, for all periods presented, the Company reclassified certain expenses that were previously included in general, administrative, and other expenses to customer operations expenses. |
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Total Revenue
Total revenue consists mainly of revenue earned from interest on receivables from outstanding loans based on the interest method. We also earn revenue from referral fees related primarily to our “Turn-Up” program, which represented 0.3% of total revenue for the year ended December 31, 2024.
Total revenue increased by $17.0 million, or 3.3%, to $526.0 million for the year ended December 31, 2024 from $508.9 million for the year ended December 31, 2023. The increase was due to higher average receivables balances throughout the period, a higher average statutory rate for the loans in the portfolio, and stronger payment activity driving a higher yield on the balances.
Change in Fair Value and Provision for Credit Losses on Finance Receivables
Commencing on January 1, 2021, we elected the fair value option on the OppLoans installment product. To derive the fair value, we generally utilize discounted cash flow analyses that factor in estimated losses and prepayments over the estimated duration of the underlying assets. Loss and prepayment assumptions are determined using historical loss data and include appropriate consideration of recent trends and anticipated future performance. Future cash flows are discounted using a rate of return that we believe a market participant would require based on the risk characteristics of the loans.
Change in fair value consists of gross charge-offs incurred in the period on the OppLoans installment product, net of recoveries, plus the change in the fair value on the installment loans portfolio. Change in fair value totaled $204.4 million for the year ended December 31, 2024, which was comprised of $240.4 million of gross charge-offs, offset by $34.7 million of recoveries and a positive fair value adjustment of $1.3 million, down from $231.4 million for the year ended December 31, 2023, which was comprised of $246.5 million of gross charge-offs and a negative fair value adjustment of $10.5 million, offset by $25.6 million of recoveries. The fair value adjustment for the year ended December 31, 2024 had a positive impact due to the increase in receivables over the period with a slightly higher fair value mark.
Provision for credit losses on finance receivables consists of gross charge-offs incurred in the period, net of recoveries, plus the change in allowance for credit losses for our SalaryTap and OppFi Card products. Provision for credit losses on finance receivables decreased by $4.3 million to $42 thousand for the year ended December 31, 2024, from $4.3 million for the year ended December 31, 2023. The decrease is largely attributed to very few remaining active SalaryTap finance receivables during the year ended December 31, 2024, while provision for credit losses was increased during the year ended December 31, 2023 to account for the then-impending closure of OppFi Card finance receivables.
Net Revenue
Net revenue is equal to total revenue less the change in fair value and provision for credit losses on finance receivables. Net revenue increased by $48.3 million, or 17.7%, to $321.5 million for the year ended December 31, 2024 from $273.2 million for the year ended December 31, 2023. This increase was due to both the increase in total revenue and the decrease in change in fair value and provision for credit losses on finance receivables.
Expenses
Expenses include costs related to salaries and employee benefits, interest expense and amortized debt issuance costs, sales and marketing, customer operations, technology, products, and analytics, and general and administrative expenses.
Expenses increased by $0.1 million, or 0.1%, to $226.9 million for the year ended December 31, 2024 from $226.8 million for the year ended December 31, 2023. The increase in expenses was primarily driven by higher professional fees, a one-time expense associated with the exit activities from the OppFi Card product, and a one-time adjustment as a result of the reclassification of OppFi Card assets from held for sale to held for investment at amortized cost that offset expenses for the year ended December 31, 2023. The increase was partially offset by reduced payment processing fees related to a renegotiation, lower capitalized technology amortization expense, lower interest expense resulting from paying down debt and rate decreases throughout 2024, and lower direct marketing costs resulting from a shift towards relatively lower-cost loans. Despite the slight increase in expenses for the year ended December 31, 2024, expenses as a percent of total revenue decreased from 44.6% to 43.1% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
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Income from Operations
Income from operations is the difference between net revenue and expenses. Income from operations increased by $48.2 million to $94.5 million for the year ended December 31, 2024 from income from operations of $46.4 million for the year ended December 31, 2023. This increase was driven primarily by higher total revenue and lower change in fair value and provision for credit losses on finance receivables, slightly offset by higher expenses for the year ended December 31, 2024 as a result of the reasons stated above.
Change in Fair Value of Warrant Liabilities
The fair value of warrant liabilities increased by $8.2 million and $5.0 million for the years ended December 31, 2024 and 2023, respectively. These warrant liabilities arose with respect to warrants issued in connection with the initial public offering of FGNA and are subject to re-measurement at each balance sheet date.
Income from Equity Method Investment
On July 31, 2024, OppFi entered into the Securities Purchase Agreement to acquire 35% of the outstanding equity securities of Bitty. OppFi determined that it does not have a controlling financial interest in Bitty, but does exercise significant influence, and therefore the investment was accounted for under the equity method. OppFi’s proportionate share of Bitty’s earnings was $1.4 million for the year ended December 31, 2024.
Other Income
Other income totaled $0.3 million for the year ended December 31, 2024 and $0.4 million for the year ended December 31, 2023. For the year ended December 31, 2024, other income includes $0.3 million in income related to the Company subleasing one floor of its office space. For the year ended December 31, 2023, other income includes $0.3 million in income related to the Company subleasing one floor of its office space and $0.1 million from the gain on partial loan forgiveness of the secured borrowing payable.
Income Before Income Taxes
Income before income taxes is the sum of income from operations, the change in fair value of warrant liabilities, income from equity method investment, and other income. Income before income taxes increased by $46.2 million, or 110.6%, to $88.1 million for the year ended December 31, 2024 from $41.8 million for the year ended December 31, 2023 for the reasons stated above.
Income Tax Expense
OppFi recorded an income tax expense of $4.2 million for the year ended December 31, 2024, an increase of $1.9 million from income tax expense of $2.3 million for the year ended December 31, 2023. This increase is largely attributed to OppFi Inc.’s increasing ownership in OppFi-LLC.
Net Income
Net income is the difference between income before income taxes and income tax expense. Net income increased by $44.4 million to $83.8 million for the year ended December 31, 2024 from $39.5 million for the year ended December 31, 2023 for the reasons stated above.
Net Income (Loss) Attributable to OppFi Inc.
Net income attributable to OppFi Inc. was $7.3 million for the year ended December 31, 2024, up from a net loss of $1.0 million for the year ended December 31, 2023. As a result of the Company’s Up-C structure, the underlying income or expense components are generally the economic interest in OppFi-LLC’s income or loss, expenses related to its status as a public company, and the change in fair value of warrant liabilities. For the year ended December 31, 2024, income from economic interest was $21.5 million, partially offset by loss from change in fair value of warrant liabilities of $8.2 million, income tax expense of $4.2 million, and general and administrative expenses of $1.8 million, for net income attributable to OppFi Inc. of $7.3 million. For the year ended December 31, 2023, income from economic interest was $7.1 million, offset by loss from change in fair value of warrant liabilities of $5.0 million, income tax expense of $2.1 million, and general and administrative expenses of $1.0 million, for a net loss attributable to OppFi Inc. of $1.0 million.
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Diluted Earnings per Share
For the years ended December 31, 2024 and 2023, the Company’s outstanding shares of Class V Voting Stock were excluded in computing the diluted earnings per share as the inclusion of these shares would have had an antidilutive effect under the if-converted method. Under the if-converted method, shares of the Company’s Class V Voting Stock are assumed to be exchanged, together with OppFi Units, into shares of the Company’s Class A Common Stock as of the beginning of the period.
CONDENSED BALANCE SHEETS
Comparison of the years ended December 31, 2024 and 2023
The following table presents our condensed balance sheet as of December 31, 2024 and 2023 (in thousands). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
| Year Ended December 31, | Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | $ | % | ||||||||||||
| Assets | |||||||||||||||
| Cash and restricted cash | $ | 88,288 | $ | 73,943 | $ | 14,345 | 19.4 | % | |||||||
| Finance receivables at fair value | 473,696 | 463,320 | 10,376 | 2.2 | |||||||||||
| Finance receivables at amortized cost, net | — | 110 | (110) | (100.0) | |||||||||||
| Equity method investment | 19,194 | — | 19,194 | — | |||||||||||
| Other assets | 59,993 | 64,170 | (4,177) | (6.5) | |||||||||||
| Total assets | $ | 641,171 | $ | 601,543 | $ | 39,628 | 6.6 | % | |||||||
| Liabilities and stockholders’ equity | |||||||||||||||
| Accounts payable and accrued expenses | $ | 33,290 | $ | 26,448 | $ | 6,842 | 25.9 | % | |||||||
| Other liabilities | 39,802 | 40,086 | (284) | (0.7) | |||||||||||
| Total debt | 318,758 | 334,116 | (15,358) | (4.6) | |||||||||||
| Warrant liabilities | 15,108 | 6,864 | 8,244 | 120.1 | |||||||||||
| Total liabilities | 406,958 | 407,514 | (556) | (0.1) | |||||||||||
| Total stockholders’ equity | 234,213 | 194,029 | 40,184 | 20.7 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 641,171 | $ | 601,543 | $ | 39,628 | 6.6 | % |
Total cash and restricted cash increased by $14.3 million as of December 31, 2024 compared to December 31, 2023 driven by an increase in received payments relative to originations, partially offset by the cash consideration for the acquisition of the equity interest in Bitty. Finance receivables at fair value increased by $10.4 million as of December 31, 2024 compared to December 31, 2023 mainly driven by growth in retained net originations and a healthier portfolio leading to fewer charge-offs year over year. Finance receivables at amortized cost, net, decreased by $0.1 million as of December 31, 2024 compared to December 31, 2023 due to the completed wind down of OppFi Card and SalaryTap finance receivables. Equity method investment increased by $19.2 million as of December 31, 2024 compared to December 31, 2023 due to the acquisition of 35% of the outstanding equity securities in Bitty. Other assets decreased by $4.2 million as of December 31, 2024 compared to December 31, 2023 mainly due to a decrease in the deferred tax asset of $4.4 million, a decrease in the operating lease right of use asset of $1.6 million, and a decrease in capitalized debt issuance costs of $1.1 million, partially offset by an increase in property, equipment, and software of $3.3 million.
Accounts payable and accrued expenses increased by $6.8 million as of December 31, 2024 compared to December 31, 2023 driven by an increase in accrued expenses of $10.4 million, partially offset by a decrease in accounts payable of $3.6 million. Other liabilities decreased by $0.3 million as of December 31, 2024 compared to December 31, 2023 driven by a decrease in the operating lease liability of $1.8 million, partially offset by an increase in the tax receivable agreement liability of $1.5 million. Total debt decreased by $15.4 million as of December 31, 2024 compared to December 31, 2023 driven by a decrease in the term loan of $19.5 million and notes payable of $1.4 million, partially offset by an increase in utilization of revolving lines of credit of $5.6 million. Warrant liabilities increased by $8.2 million due to the increase in the valuation of the warrants as of December 31, 2024 compared to December 31, 2023. Total stockholders’ equity increased by $40.2 million as of
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December 31, 2024 compared to December 31, 2023 driven by net income and stock-based compensation, partially offset by distributions to members of OppFi-LLC, purchases of treasury stock, and dividend issuance.
NON-GAAP FINANCIAL MEASURES
We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBT, Adjusted Net Income, and Adjusted EPS can provide useful measures for period-to-period comparisons of our business and useful information to investors and others in understanding and evaluating our operating results. However, non-GAAP financial measures are not calculated in accordance with GAAP financial measures, should not be considered an alternative to any measure of financial performance calculated and presented in accordance with GAAP, and may not be comparable to the non-GAAP financial measures of other companies.
Adjusted EBT and Adjusted Net Income
Beginning with the quarter ended March 31, 2024, for all periods presented, we have updated our presentation and calculation of Adjusted EBT, and the corresponding presentations and calculations of Adjusted Net Income and Adjusted EPS, to no longer add back debt issuance cost amortization.
Adjusted EBT is a non-GAAP financial measure defined as our GAAP net income adjusted to eliminate the effect of certain items as shown below, including income tax expense, other income, change in fair value of warrant liabilities, and other addbacks and one-time expenses. Adjusted Net Income is a non-GAAP financial measure defined as our Adjusted EBT less pro forma taxes for comparison purposes. We believe that Adjusted EBT and Adjusted Net Income are important measures because they allow management, investors, and our Board to evaluate and compare our operating results from period-to-period by making the adjustments described below.
Adjusted EBT and Adjusted Net Income exclude certain expenses that are required in accordance with GAAP because they are non-recurring items (such as severance), non-cash expenditures (such as changes in the fair value of warrant liabilities and expenses related to stock compensation), or are not related to our underlying business performance. We believe these adjustments provide investors with a comparative view of expenses that the Company expects to incur on an ongoing basis.
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The following table presents reconciliations of non-GAAP financial measures for the years ended December 31, 2024 and 2023 (in thousands, except share and per share data). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
Comparison of the years ended December 31, 2024 and 2023
| (in thousands, except share and per share data) | Year Ended December 31, | Variance | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | 2024 | 2023 | $ | % | |||||||||||
| Net income | $ | 83,837 | $ | 39,479 | $ | 44,358 | 112.4 | % | |||||||
| Income tax expense | 4,215 | 2,331 | 1,884 | 80.8 | |||||||||||
| Other income | (318) | (431) | 113 | (26.3) | |||||||||||
| Change in fair value of warrant liabilities | 8,244 | 4,976 | 3,268 | 65.7 | |||||||||||
| Other addbacks and one-time expenses, net(a) | 12,024 | 7,928 | 4,096 | 51.7 | |||||||||||
| Adjusted EBT(b) | 108,002 | 54,283 | 53,719 | 99.0 | |||||||||||
| Less: pro forma taxes(c) | 25,337 | 12,789 | 12,548 | 98.1 | |||||||||||
| Adjusted net income(b) | $ | 82,665 | $ | 41,494 | $ | 41,171 | 99.2 | % | |||||||
| Adjusted earnings per share(b) | $ | 0.95 | $ | 0.49 | |||||||||||
| Weighted average diluted shares outstanding | 86,652,427 | 85,051,304 | |||||||||||||
| (a) For the year ended December 31, 2024, other addbacks and one-time expenses, net of $12.0 million included $5.3 million in expenses related to stock compensation, $3.0 million in expenses related to OppFi Card’s exit activities, $1.8 million in expenses related to legal matters, $1.3 million in expenses related to severance, and $0.7 million in expenses related to corporate development. For the year ended December 31, 2023, other addbacks and one-time expenses, net of $7.9 million included $4.1 million in expenses related to provision for credit losses on the OppFi Card finance receivables, $4.1 million in expenses related to stock compensation, $1.5 million in expenses related to corporate development, $0.9 million in expenses related to retention and severance, and $0.3 million in expenses related to legal matters, partially offset by a $3.0 million addback from the reclassification of OppFi Card finance receivables from assets held for sale to assets held for investment at amortized cost. | |||||||||||||||
| (b) Beginning with the quarter ended March 31, 2024, for all periods presented, the Company has updated its presentation and calculation of Adjusted EBT, and the corresponding presentations and calculations of Adjusted Net Income and Adjusted EPS, to no longer add back debt issuance cost amortization. | |||||||||||||||
| (c) Assumes a tax rate of 23.46% for the year ended December 31, 2024 and a tax rate of 23.56% for the year ended December 31, 2023, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes. |
Adjusted Earnings Per Share
Adjusted EPS is defined as adjusted net income divided by weighted average diluted shares outstanding, which represents shares of both classes of common stock outstanding, excluding 25,500,000 shares related to earnout units, and including the impact of dilutive securities, such as restricted stock units, performance stock units, stock options, and the employee stock purchase plan. The earnout units were not earned pursuant to the earnout provisions of the Business Combination Agreement on or prior to July 21, 2024, the third anniversary of the closing date of the Company’s business combination. Accordingly, on such date the earnout units and associated Class V Voting Stock were forfeited. We believe that presenting Adjusted EPS is useful to investors and others because, due to the Company’s Up-C structure, Basic EPS calculated on a GAAP basis excludes a large percentage of the Company’s outstanding shares of common stock, which are Class V Voting Stock, and Diluted EPS calculated on a GAAP basis excludes dilutive securities, including Class V Voting Stock, restricted stock units, performance stock units, stock options, and the employee stock purchase plan, in any periods in which their inclusion would have an antidilutive effect. Shares of the Company’s Class V Voting Stock may be exchanged, together with OppFi Units, into shares of the Company’s Class A Common Stock. We believe that presenting Adjusted EPS is useful to investors and others because it presents the Company’s Adjusted Net Income on a per share basis based on the shares of the Company’s common stock that would be issued but for, and can be issued as a result of, the Company’s Up-C structure.
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The following tables present reconciliations of non-GAAP financial measures for the years ended December 31, 2024 and 2023 (in thousands, except share and per share data). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
Comparison of the years ended December 31, 2024 and 2023
| Year Ended December 31, | |||
|---|---|---|---|
| (unaudited) | 2024 | 2023 | |
| Weighted average Class A common stock outstanding | 20,145,606 | 16,391,199 | |
| Weighted average Class V voting stock outstanding | 65,619,358 | 93,857,926 | |
| Elimination of earnouts at period end | — | (25,500,000) | |
| Dilutive impact of restricted stock units | 789,783 | 261,595 | |
| Dilutive impact of performance stock units | 72,802 | 40,584 | |
| Dilutive impact of stock options | 24,679 | — | |
| Dilutive impact of employee stock purchase plan | 199 | — | |
| Weighted average diluted shares outstanding | 86,652,427 | 85,051,304 |
| (in thousands, except share and per share data) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | $ | Per Share | $ | Per Share | ||||||||||
| Weighted average diluted shares outstanding | 86,652,427 | 85,051,304 | ||||||||||||
| Net income | $ | 83,837 | $ | 0.97 | $ | 39,479 | $ | 0.46 | ||||||
| Income tax expense | 4,215 | 0.05 | 2,331 | 0.03 | ||||||||||
| Other income | (318) | — | (431) | (0.01) | ||||||||||
| Change in fair value of warrant liabilities | 8,244 | 0.10 | 4,976 | 0.06 | ||||||||||
| Other addbacks and one-time expenses, net(a) | 12,024 | 0.14 | 7,928 | 0.09 | ||||||||||
| Adjusted EBT(b) | 108,002 | 1.25 | 54,283 | 0.64 | ||||||||||
| Less: pro forma taxes(c) | 25,337 | 0.29 | 12,789 | 0.15 | ||||||||||
| Adjusted net income(b) | $ | 82,665 | $ | 0.95 | $ | 41,494 | $ | 0.49 | ||||||
| (a) For the year ended December 31, 2024, other addbacks and one-time expenses, net of $12.0 million included $5.3 million in expenses related to stock compensation, $3.0 million in expenses related to OppFi Card’s exit activities, $1.8 million in expenses related to legal matters, $1.3 million in expenses related to severance, and $0.7 million in expenses related to corporate development. For the year ended December 31, 2023, other addbacks and one-time expenses, net of $7.9 million included $4.1 million in expenses related to provision for credit losses on the OppFi Card finance receivables, $4.1 million in expenses related to stock compensation, $1.5 million in expenses related to corporate development, $0.9 million in expenses related to retention and severance, and $0.3 million in expenses related to legal matters, partially offset by a $3.0 million addback from the reclassification of OppFi Card finance receivables from assets held for sale to assets held for investment at amortized cost. | ||||||||||||||
| (b) Beginning with the quarter ended March 31, 2024, for all periods presented, the Company has updated its presentation and calculation of Adjusted EBT, and the corresponding presentations and calculations of Adjusted Net Income and Adjusted EPS, to no longer add back debt issuance cost amortization. | ||||||||||||||
| (c) Assumes a tax rate of 23.46% for the year ended December 31, 2024 and a tax rate of 23.56% for the year ended December 31, 2023, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes. |
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LIQUIDITY AND CAPITAL RESOURCES
To date, the funds received from operating income and our ability to obtain lending commitments have provided the liquidity necessary for us to fund our operations.
Maturities of our financing facilities are staggered over two years to help minimize refinance risk.
The following table presents our unrestricted cash and undrawn debt as of December 31, 2024 and 2023 (in thousands):
| December 31, | |||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||
| Unrestricted cash | $ | 61,344 | $ | 31,791 | |||
| Undrawn debt | $ | 206,242 | $ | 192,333 |
As of December 31, 2024, OppFi had $61.3 million in unrestricted cash, an increase of $29.6 million from December 31, 2023. As of December 31, 2024, OppFi had an additional $206.2 million of unused debt capacity under its financing facilities for future availability, representing a 39% overall undrawn capacity, an increase from $192.3 million as of December 31, 2023. The increase in undrawn debt was driven primarily by using excess cash to pay down debt on our term loan. Including total financing commitments of $525.0 million and cash and restricted cash on the balance sheet of $88.3 million, OppFi had approximately $613.3 million in funding capacity as of December 31, 2024.
OppFi believes that its unrestricted cash, undrawn debt and funds from operating income will be sufficient to meet its liquidity needs, including repayment of the current portion of its debt as it becomes due, for at least the next 12 months from the date of this Quarterly Report. The Company’s future capital requirements will depend on multiple factors, including its revenue growth, aggregate receivables balance, interest expense, working capital requirements, cash provided by and used in operating, investing and financing activities and capital expenditures.
To the extent OppFi’s unrestricted cash balances, funds from operating income and funds from undrawn debt are insufficient to satisfy its liquidity needs in the future, the Company may need to raise additional capital through equity or debt financing and may not be able to do so on terms acceptable to the Company, if at all. If the Company is unable to raise additional capital when needed, its results of operations and financial condition could be materially and adversely impacted.
CASH FLOWS
The following table presents cash provided by (used in) operating, investing and financing activities during the years ended December 31, 2024 and 2023 (in thousands):
| Year Ended December 31, | Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | $ | % | ||||||||||||
| Net cash provided by operating activities | $ | 323,806 | $ | 296,146 | $ | 27,660 | 9.3 | % | |||||||
| Net cash used in investing activities | (243,442) | (244,292) | 850 | (0.3) | |||||||||||
| Net cash used in financing activities | (66,019) | (27,581) | (38,438) | 139.4 | |||||||||||
| Net increase in cash and restricted cash | $ | 14,345 | $ | 24,273 | $ | (9,928) | (40.9) | % |
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Operating Activities
Net cash provided by operating activities was $323.8 million for the year ended December 31, 2024. This was an increase of $27.7 million when compared to net cash provided by operating activities of $296.1 million for the year ended December 31, 2023. Cash provided by operating activities increased mainly due to higher net income.
Investing Activities
Net cash used in investing activities was $243.4 million for the year ended December 31, 2024. This was a decrease of $0.9 million when compared to net cash used in investing activities of $244.3 million for the year ended December 31, 2023, mainly due to higher finance receivables repaid and recovered, partially offset by higher finance receivables originated and acquired, increased purchases of equipment and capitalized technology, and the cash consideration for the acquisition of the equity interest in Bitty.
Financing Activities
Net cash used in financing activities was $66.0 million for the year ended December 31, 2024. This was an increase of $38.4 million when compared to net cash used in financing activities of $27.6 million for the year ended December 31, 2023, primarily due to an increase in distributions to members of OppFi-LLC, net payments of senior debt, repurchases of common stock, and dividends paid on common stock.
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FINANCING ARRANGEMENTS
Our corporate credit facilities consist of term loans and revolving loan facilities that we have drawn on to finance our operations and for other corporate purposes. These borrowings are generally secured by all the assets of OppFi-LLC that have not otherwise been sold or pledged to secure our structured finance facilities, such as assets belonging to certain of the special purpose entity subsidiaries of OppFi-LLC (“SPEs”). In addition, we, through our SPEs, have entered into warehouse credit facilities to partially finance the purchase of participation rights in loans originated by our bank partners through our platform, which credit facilities are secured by the loans or participation rights. For a detailed discussion on financing arrangements refer to Note 6 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. The following is a summary of OppFi’s borrowings as of December 31, 2024 and 2023, including borrowing capacity as of December 31, 2024 (in thousands):
| Borrowing | December 31, | December 31, | Interest Rate as of | Maturity | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Purpose | Borrower(s) | Capacity | 2024 | 2023 | December 31, 2024 | Date | |||||||||||
| Senior debt, net | |||||||||||||||||
| Revolving line of credit | Opportunity Funding SPE V, LLC (Tranche B) (1) | 125,000 | 84,500 | 103,400 | SOFR | plus | 6.75% | June 2026 | |||||||||
| Revolving line of credit | Opportunity Funding SPE V, LLC (Tranche C) (1) | 125,000 | 62,500 | 37,500 | SOFR | plus | 7.50% | July 2027 | |||||||||
| Revolving line of credit | Opportunity Funding SPE IX, LLC (Castlelake) | 150,000 | 85,871 | 93,871 | SOFR | plus | 7.50% | December 2026 | |||||||||
| Revolving line of credit | Gray Rock SPV LLC | 75,000 | 55,957 | 48,442 | SOFR | plus | 7.45% | October 2026 | |||||||||
| Total revolving lines of credit | 475,000 | 288,828 | 283,213 | ||||||||||||||
| Term loan, net | OppFi-LLC | 50,000 | 29,930 | 49,454 | SOFR | plus | 0.11% | plus | 10.00% | September 2025 | |||||||
| Total senior debt, net | $ | 525,000 | $ | 318,758 | $ | 332,667 | |||||||||||
| Note payable | |||||||||||||||||
| Financed insurance premium | OppFi-LLC | $ | — | $ | — | $ | 1,449 | 9.70% | June 2024 | (2) | |||||||
| (1) On February 13, 2025, OppFi-LLC and Opportunity Funding SPE V, LLC entered into a Second Amended and Restated Revolving Credit Agreement (the “Second A&R Credit Agreement”), which amended that certain Amended and Restated Revolving Credit Agreement, originally entered into on July 19, 2023 (as amended, supplemented or otherwise modified prior to the Amendment Date, the “A&R Credit Agreement”), by and among OppFi-LLC, Opportunity Funding SPE V, LLC, OppWin, LLC, Midtown Madison Management LLC, as administrative and collateral agent and the lenders party thereto. The Second A&R Credit Agreement amended the A&R Credit Agreement to, among other things, increase the size of the facility under the A&R Credit Agreement from $250 million to $300 million and extend the maturity date to February 13, 2029. The $300 million of availability under the Second A&R Credit Agreement is comprised of $62.5 million under the existing Tranche C and $237.5 million under a new Tranche D. Loans under Tranche C bear interest at the Term SOFR plus 7.75%, through December 31, 2025, and at Term SOFR plus 7.3% at January 1, 2026 and thereafter. Loans under Tranche D bear interest at the Term SOFR plus 7.3%. A portion of the proceeds of the Second A&R Credit Agreement were used to repay in full the outstanding Tranche B loans under the A&R Credit Agreement. | |||||||||||||||||
| (2) Maturity date as of 12/31/2023 and for the subsequent period until the borrowing was paid in full in June 2024. |
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CRITICAL ACCOUNTING ESTIMATES
Installment Finance Receivables: To derive the fair value, the Company generally utilizes discounted cash flow analyses that factor in estimated losses and prepayments over the estimated duration of the underlying assets. Loss and prepayment assumptions are determined using historical loss data and include appropriate consideration of recent trends and anticipated future performance. Future cash flows are discounted using a rate of return that the Company believes a market participant would require.
The following describes the primary inputs to the discounted cash flow analyses that require significant judgment:
•Discount rate: The discount rate utilized in the discounted cash flow analyses reflects our estimate of the rate of return that a market participant would require when investing in financial instruments with similar risk and return characteristics.
•Servicing cost: The servicing cost percentage that is applied to portfolio’s expected cash flows reflects our estimate of the amount we would incur to service the underlying assets over the assets’ remaining lives. Servicing costs are derived from an internal analysis of our cost structure considering the characteristics of our installment finance receivables and have been benchmarked against observable information on comparable assets in the marketplace.
•Default rate: The default rate reflects our estimate of principal payments that will not be repaid over the remaining life of an installment finance receivable. Charge-off expectations are developed using the historical performance of our installment finance receivable portfolio but also incorporate discretionary adjustments based on our expectations of future credit performance.
•Prepayment rate: The prepayment rate is the estimated percentage of principal payments that will occur earlier than contractually required over the remaining life of an installment finance receivable. Prepayments accelerate the timing of principal repayment and reduce interest payments. Prepayment rates in our discounted cash flow models are developed using historical results but may also incorporate discretionary adjustments based on our expectations of future performance.
Changes in this estimate, that are likely to occur from period to period, or the use of different estimates that the Company could have reasonably used in the current period, would have a material impact on the Company’s financial position, results of operations or liquidity.