Oppfi Inc ((OPFI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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OppFi’s recent earnings call highlighted a strong performance with significant revenue and profitability growth, despite some challenges. The sentiment was optimistic, driven by effective risk management and strategic expansions, suggesting a positive outlook for the company.
Record-Breaking Revenue and Profitability
OppFi reported a remarkable 13.5% increase in revenue year-over-year, achieving a record adjusted net income of $41 million, which marks a 41% growth compared to the previous year. This impressive financial performance underscores the company’s robust business model and strategic execution.
Positive Growth in Originations
The company experienced a 12.5% growth in net originations year-over-year, with nearly half of these originations coming from new customers. Additionally, auto approval rates increased to 79%, reflecting enhanced operational efficiency and customer acquisition strategies.
Successful Model 6 Performance
OppFi’s Model 6 credit model continues to perform well, maintaining strong unit economics. This model has enabled better segmentation across risk segments, contributing to the company’s overall financial success.
Improved Operating Leverage and Cost Management
Operational improvements have led to a reduction in total expenses before interest, which declined to 30% of revenue from 33% last year. This demonstrates OppFi’s commitment to cost management and operational efficiency.
Strategic Credit Facility Expansion
The company secured a new $150 million credit facility with lower interest rates, which is expected to further reduce interest expenses in the future. This strategic move strengthens OppFi’s financial flexibility and supports its growth initiatives.
Continued Investment in Innovation
OppFi is making progress with its LOLA origination system, aiming for full implementation by Q1 2026. Additionally, promising tests for Connected TV advertising are set to drive growth in 2026, highlighting the company’s focus on innovation.
Increased Charge-Offs in New Loan Vintages
While higher charge-offs were observed in new loan vintages, OppFi’s risk-based pricing strategy helped maintain unit economics, ensuring that the company remains resilient in the face of these challenges.
Slight Decrease in Yield
The yield decreased slightly to 133% from 134% in the third quarter of 2024. Despite this minor decline, OppFi’s overall financial performance remains strong.
Forward-Looking Guidance
Looking ahead, OppFi has revised its earnings guidance upward for the third time this year, expecting continued double-digit growth in revenue and adjusted net income into 2026. This optimistic outlook is driven by strategic investments in technology and enhancements in risk-based pricing.
In summary, OppFi’s earnings call conveyed a positive sentiment with strong financial results and strategic initiatives that position the company for continued growth. Despite some challenges, the company’s effective risk management and focus on innovation are expected to drive future success.