OppFi Inc. 10-Q Summary: Quarter Ended September 30, 2024
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2024. OppFi Inc. is a tech-enabled specialty finance platform that partners with community banks to extend credit access to consumers, primarily through its OppLoans platform. The company operates under an "Up-C" structure where the operating assets are held by a limited liability company (OppFi-LLC). During the quarter, OppFi completed the acquisition of a 35% equity interest in Bitty Holdings, LLC, a small business credit access company.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $136.6 million | $133.2 million | $390.2 million | $376.0 million |
| Net Revenue | $91.2 million | $75.7 million | $240.7 million | $207.4 million |
| Net Income | $32.1 million | $15.5 million | $69.9 million | $37.5 million |
| Net Income Attributable to OppFi Inc. | $4.3 million | $2.2 million | $12.9 million | $4.6 million |
| Diluted EPS (OppFi Inc.) | $0.21 | $0.13 | $0.65 | $0.29 |
| Adjusted EPS (Non-GAAP) | $0.33 | $0.16 | $0.72 | $0.39 |
| Total Assets | $619.3 million | — | — | — |
| Total Debt (Senior Debt, net) | $325.6 million | — | — | — |
| Cash and Restricted Cash | $74.2 million | — | — | — |
| Operating Cash Flow (9M) | $229.3 million | $213.6 million | — | — |
Note: Net Income includes significant noncontrolling interest ($27.8 million for Q3 2024). Adjusted EPS is a non-GAAP measure.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 2.6% year-over-year (Q3) and 3.8% (9M), driven by higher average statutory rates and stronger payment activity.
- Profitability: Net income attributable to OppFi Inc. increased 96.6% in Q3 and 182.0% in the first nine months of 2024 compared to the prior year periods.
- Expense Management: Total expenses decreased 6.7% in Q3 2024 compared to Q3 2023, primarily due to reduced payment processing fees, headcount efficiency, and lower technology amortization. However, 9M expenses increased slightly (0.6%) due to one-time exit costs for the OppFi Card product.
- Portfolio Metrics: Net originations increased 11.8% in Q3 to $218.8 million. Ending receivables decreased slightly (0.5%) to $413.7 million. Net charge-offs as a percentage of total revenue improved significantly, dropping to 34.3% in Q3 from 42.4% in Q3 2023.
- Acquisition: The company acquired a 35% stake in Bitty Holdings for approximately $18 million (cash and equity), recorded as an equity method investment.
Guidance, Outlook, Risks, and Unusual Items
- Share Repurchases: The Board authorized a $20.0 million share repurchase program in April 2024. As of September 30, 2024, the company repurchased approximately 1.0 million shares for $3.6 million, with $16.4 million remaining available.
- Dividends: A dividend of $0.12 per share was paid in May 2024.
- Legal Contingencies: The company is involved in ongoing litigation with the California Department of Financial Protection and Innovation regarding the applicability of interest rate caps (AB 539) to its bank-partnered loans. The outcome remains uncertain.
- Internal Controls: Management disclosed a material weakness in internal controls over financial reporting related to IT general controls and user access segregation. A remediation plan is underway, but controls were deemed ineffective as of the reporting date.
- Debt Covenants: The company amended several credit facilities in 2024 to remove performance triggers and extend maturities. It remains subject to cross-default provisions.
- Exit Costs: The company recognized $2.9 million in exit costs related to the wind-down of its OppFi Card product.
Investor Verification Checklist
- Noncontrolling Interest Impact: Verify the distinction between consolidated Net Income ($32.1M) and Net Income Attributable to OppFi Inc. ($4.3M) due to the Up-C structure.
- California Litigation Status: Monitor the outcome of the lawsuit regarding AB 539 interest rate caps, which could materially affect the lending model in California.
- Internal Control Remediation: Track progress on the remediation of the material weakness in IT general controls and user access segregation.
- Debt Capacity: Confirm the utilization of the $525 million total financing commitment and the status of the $199.4 million undrawn capacity.
- Bitty Integration: Assess the financial performance and integration of the new 35% equity investment in Bitty Holdings.