Business context and reporting period
OppFi Inc.’s Form 10-K reports the fiscal year ended December 31, 2021, with comparisons to 2020 and, where shown, 2019. OppFi operates a digital lending platform that enables bank partners to offer primarily unsecured installment loans to consumers with limited access to mainstream credit. The business combination with FG New America Acquisition Corp. closed July 20, 2021; OppFi adopted an Up-C structure and owned approximately 12.4% of OppFi-LLC at year-end.
Financial and operating performance
| Metric | FY 2021 | FY 2020 | Change / context |
|---|---|---|---|
| Total revenue, reported | $350.6 million | $291.0 million | Up 20.5%; comparability is affected by the 2021 fair value accounting election. |
| Adjusted revenue | $350.6 million | $323.0 million | Up 8.6%; non-GAAP measure that adjusts 2020 for loan-origination-cost amortization. |
| Net revenue | $263.7 million | $200.2 million | Up 31.7%. |
| Income from operations | $57.3 million | $77.5 million | Down 26.1%, as expenses rose substantially. |
| Net income | $89.8 million | $77.5 million | Up 15.8%; includes a $26.4 million warrant-liability fair value gain and $6.4 million PPP loan forgiveness gain. |
| Net income attributable to OppFi Inc.; EPS | $25.6 million; $1.93 basic and diluted | Not presented | Pre-combination earnings were attributable to OppFi-LLC members. |
| Adjusted net income; adjusted EBITDA | $65.8 million; $116.9 million | $55.2 million; $101.2 million | Up 19.2% and 15.5%, respectively; non-GAAP measures. |
| Net cash from operating activities | $167.3 million | $192.1 million | Down 12.9%. |
| Net cash used in investing activities | $199.5 million | $98.3 million | Higher originations and receivables acquired. |
| Net cash from/(used in) financing activities | $48.8 million | $(84.1) million | Higher net borrowing, partly offset by distributions and transaction costs. |
At year-end, total assets were $502.1 million and total liabilities were $344.2 million. Cash and restricted cash totaled $62.4 million, including $25.1 million unrestricted and $37.3 million restricted. Total debt was $274.0 million, comprising $251.6 million senior debt and $22.4 million secured borrowing payable. The company reported $158.1 million of undrawn debt capacity and approximately $473 million of funding capacity including cash; management said available liquidity and operating funds should meet needs for at least 12 months.
Net originations grew 23.1% to $595.1 million, and ending receivables increased 22.4% to $337.5 million. Bank partners accounted for 90.6% of net originations, up from 65.0%; FinWise alone accounted for approximately 60.8%. Average yield was 126.9%, versus 128.1%. Annualized net charge-offs as a share of average receivables rose to 37.5% from 35.6%. Auto-approval increased to 60.0% from 25.7%. Marketing cost per funded loan rose to $78 from $62, while cost per new funded loan rose to $254 from $211.
Material changes and accounting
- Effective January 1, 2021, OppFi elected fair value accounting for its core OppLoans installment receivables. Origination costs are now expensed as incurred rather than amortized through revenue, and changes in receivable fair value are recorded in earnings. Management provides fair-value pro forma comparisons; reported revenue growth therefore overstates growth on that comparable basis.
- Expenses increased 68.2% to $206.4 million, reflecting higher marketing, payroll, technology, professional, public-company, and compliance costs, as well as the accounting change.
- Net charge-offs increased as customer credit performance moved toward pre-pandemic levels amid reduced government stimulus. Management said model performance had been supported by stimulus and cautioned that the models have not been extensively tested in a recession without significant government assistance.
- Following the July 2021 business combination, the parent’s reported net income differs materially from consolidated net income because most economic ownership remained with noncontrolling members.
Outlook, risks, contingencies and unusual items
- The filing provides no formal numerical revenue or earnings guidance. SalaryTap and OppFi Card were early-stage products and were not expected to contribute meaningfully to 2022 results. Management described potential expansion into near-prime lending and adjacent financial products.
- Regulatory and legal exposure is significant. In November 2021, OppFi settled a District of Columbia action, agreeing to pay $0.3 million, provide $1.5 million of consumer refunds (unpaid at year-end), and refrain from certain activities in the District; it denied the allegations.
- In February 2022, California’s DFPI asserted that OppFi was the “true lender” for certain bank-partner loans and that California’s 36% rate cap applied. OppFi filed suit on March 7, 2022 seeking declaratory and injunctive relief. California represented approximately 11% of year-end finance receivables; the outcome was uncertain.
- Other principal risks include reliance on bank partners—especially FinWise—funding availability, high customer charge-offs, competition, economic and pandemic-related uncertainty, and evolving consumer-lending, usury, fair-lending, AI, and bank-partnership regulation. Loan APRs are disclosed as generally ranging up to 160%; the company says its historical average was approximately 150%.
- Debt facilities are largely secured by receivables and include borrowing-base tests, covenants, and floating-rate exposure. The company reported $274.0 million of debt at year-end and warned that limited funding access or covenant issues could constrain originations.
- The Tax Receivable Agreement requires payment to members of 90% of specified realized tax savings; the year-end liability was $23.3 million. Management cautioned that future payments could be substantial.
- Management did not assess internal control over financial reporting for year-end 2021 and therefore did not provide an effectiveness conclusion; the external auditor likewise was not engaged to audit internal controls. The financial-statement audit received an unqualified opinion.
- After year-end, the board authorized a discretionary share repurchase program of up to $20 million through December 2023. Todd Schwartz became CEO effective February 28, 2022, succeeding Neville Crawley.
Key facts for investors to verify
- Reconcile reported revenue and earnings with fair-value pro forma and non-GAAP measures; assess the effect of the $32.8 million combined warrant and PPP gains on reported net income.
- Track charge-offs, receivable fair-value assumptions, and credit performance as stimulus effects fade and economic conditions change.
- Monitor the California DFPI litigation and other “true lender,” usury, and bank-partnership developments, including the consequences of the District of Columbia settlement.
- Assess FinWise concentration, renewal and termination terms, and the availability, cost, and covenant headroom of funding facilities.
- Review unrestricted versus restricted cash, debt maturities and floating-rate exposure, and the potential cash demands of the Tax Receivable Agreement.
- Consider the limited public-company reporting history, absence of a year-end internal-control assessment, noncontrolling ownership, and possible dilution from warrants, equity awards, and member exchanges.