What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 177 added, 113 removed, 470 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 73,371 $ 98,817

9 unchanged sentences

Asset-backed notes at fair value 2,118,786 2,387,674

Asset-backed borrowings at amortized cost 25,600 —

Acquisition and corporate financing 271,507 222,879

3 unchanged sentences

Stockholders' equity

Common stock, $ 0.0001 par value - 1,000,000,000 shares authorized at March 31, 2023 and December 31, 2022;

34,156,369 shares issued and 33,884,346 shares outstanding at March 31, 2023;

Common stock, $ 0.0001 par value - 1,000,000,000 shares authorized at June 30, 2023 and December 31, 2022;

34,299,366 shares issued and 34,027,343 shares outstanding at June 30, 2023;

33,626,630 shares issued and 33,354,607 shares outstanding at December 31, 2022

Common stock, additional paid-in capital 575,587 547,799

Retained earnings (deficit) ( 95,988 ) 6,102

Treasury stock at cost, 272,023 shares at March 31, 2023 and December 31, 2022

Retained earnings (accumulated deficit) ( 110,887 ) 6,102

Treasury stock at cost, 272,023 shares at June 30, 2023 and December 31, 2022

( 6,309 ) ( 6,309 )

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2023 2022 2023 2022

Interest income $ 240,463 $ 207,655 $ 478,082 $ 399,892

2 unchanged sentences

Interest expense 41,448 17,104 80,445 30,781

Net increase (decrease) in fair value ( 215,710 ) 3,971

Net decrease in fair value ( 106,490 ) ( 63,484 ) ( 322,200 ) ( 59,513 )

Net revenue 118,625 145,214 123,430 350,228

20 unchanged sentences

(in thousands, except share data)

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

Common Stock Warrants

Shares Par Value Additional Paid-in Capital Shares Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

Shares Par Value Additional Paid-in Capital Shares Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Treasury Stock Total Stockholders' Equity

Balance – January 1, 2023 33,354,607 $ 7 $ 547,799 $ — $ — $ 6,102 $ ( 6,309 ) $ 547,599

4 unchanged sentences

Balance – March 31, 2023 33,884,346 $ 7 $ 551,764 2,096,727 $ 6,672 $ ( 95,988 ) $ ( 6,309 ) $ 456,146

Issuance of common stock upon exercise of stock options, net of shares withheld 26,458 — ( 95 ) — — — — ( 95 )

Stock-based compensation expense — — 4,754 — — — — 4,754

Vesting of restricted stock units, net of shares withheld 116,539 — ( 267 ) — — — — ( 267 )

Issuance of warrants to purchase common stock in connection with debt financing — — — 2,096,726 12,759 — — 12,759

Net loss — — — — — ( 14,899 ) — ( 14,899 )

Balance – June 30, 2023 34,027,343 $ 7 $ 556,156 4,193,453 $ 19,431 $ ( 110,887 ) $ ( 6,309 ) $ 458,398

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share data)

For the Three Months Ended March 31, 2022

For the Six Months Ended June 30, 2022

Shares Par Value Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

5 unchanged sentences

Balance – March 31, 2022 32,806,893 $ 7 $ 526,729 $ 129,509 $ ( 6,309 ) $ 649,936

Issuance of common stock upon exercise of stock options 32,345 — 78 — — 78

Repurchase of stock options ( 2,706 ) — ( 28 ) — — ( 28 )

Stock-based compensation expense — — 7,642 — — 7,642

Vesting of restricted stock units, net of shares withheld 63,064 — ( 273 ) — — ( 273 )

Net loss — — — ( 9,157 ) — ( 9,157 )

Balance – June 30, 2022 32,899,596 $ 7 $ 534,148 $ 120,352 $ ( 6,309 ) $ 648,198

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

21 unchanged sentences

Repayments of secured financing ( 3,140 ) ( 1,220,000 )

Repayments of asset-backed notes ( 136,369 ) ( 10,395 )

Borrowings under asset-backed notes at fair value — 404,984

Repayments of asset-backed notes at fair value ( 330,406 ) ( 21,093 )

Borrowings under asset-backed borrowings at amortized cost 25,544 —

Borrowings under acquisition and corporate financing 73,355 —

1 unchanged sentence

Payments of deferred financing costs ( 1,550 ) ( 314 )

Borrowings allocated to warrants 6,632 —

Net payments related to stock-based activities ( 1,726 ) ( 7,299 )

17 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

March 31, 2023

June 30, 2023

Organization and Description of Business

Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") is a digital banking platform that puts its members’ financial goals within reach.

With intelligent borrowing, savings, budgeting, and spending capabilities, the Company empowers members with the confidence to build a better financial future.

Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") is a mission-driven fintech that puts its members’ financial goals within reach.

With intelligent borrowing, savings, and budgeting capabilities, the Company empowers members with the confidence to build a better financial future.

Oportun takes a holistic approach to serving its members and views as its purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a path to a financially healthy life.

2 unchanged sentences

The Company's credit products include personal loans, secured personal loans and credit cards.

The Company's digital banking products include automated savings, digital banking, long-term investing and retirement savings.

The Company's digital banking products include automated savings, long-term investing and retirement savings.

The Company is headquartered in San Carlos, California.

19 unchanged sentences

Basic and diluted earnings (loss) per share are calculated as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except share and per share data) 2023 2022 2023 2022

10 unchanged sentences

The following common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Stock options 3,062,442 3,587,839 3,162,156 2,897,171

3 unchanged sentences

Variable interest entities ("VIEs") are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of equity investment at risk lack the ability to direct the entity's activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.

For all VIEs in which we are involved, we assess whether we are the primary beneficiary of the VIE on an ongoing basis.

In circumstances where we have both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, we would conclude that we are the primary beneficiary of the VIE, and we consolidate the VIE.

In situations where we are not deemed to be the primary beneficiary of the VIE, we do not consolidate the VIE and only recognize our interests in the VIE.

For all VIEs in which the Company is involved, it assesses whether it is the primary beneficiary of the VIE on an ongoing basis.

In circumstances where the Company has both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, it would conclude that it is the primary beneficiary of the VIE, and it consolidates the VIE.

In situations where the Company is not deemed to be the primary beneficiary of the VIE, it does not consolidate the VIE and only recognize our interests in the VIE.

In addition, on June 16, 2023, the Company entered into a forward flow whole loan sale agreement that is considered a secured borrowing and is not considered a VIE.

See Note 8, Borrowings for additional information on the secured borrowing under the caption of asset-backed borrowings at amortized cost.

Consolidated VIEs

10 unchanged sentences

The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s Condensed Consolidated Balance Sheets (Unaudited):

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

29 unchanged sentences

Pursuant to this agreement, the Company has a commitment to sell a minimum of $ 2.0 million of its unsecured loan originations each month, with an option to sell an additional $ 4.0 million each month, over an approximately one-year period, subject to certain eligibility criteria.

The originations of loans sold and held for sale during the three months ended March 31, 2023 was $ 10.0 million and the Company recorded a gain on sale of $ 1.4 million and servicing revenue of $ 3.0 million.

The originations of loans sold and held for sale during the three months ended March 31, 2022 was $ 48.7 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 4.0 million.

On June 16, 2023, the Company entered into a forward flow whole loan sale agreement that does not qualify as a sale for accounting purposes and is reported as a secured borrowing.

See Note 8, Borrowings for additional information on the secured borrowing under the caption of asset-backed borrowings at amortized cost.

The originations of loans sold and held for sale during the three months ended June 30, 2023 was $ 15.6 million and the Company recorded a gain on sale of $ 2.3 million and servicing revenue of $ 2.5 million.

The originations of loans sold and held for sale during the three months ended June 30, 2022 was insignificant and the gain on sale that the Company recorded was insignificant as a result of our whole loan sale agreement expiration on March 4, 2022.

Servicing revenue during the same time period was $ 6.3 million.

The originations of loans sold and held for sale during the six months ended June 30, 2023 was $ 25.7 million and the Company recorded a gain on sale of $ 3.7 million and servicing revenue of $ 5.6 million.

The originations of loans sold and held for sale during the six months ended June 30, 2022 was $ 49.0 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 10.3 million.

Capitalized Software and Other Intangibles

Capitalized software, net consists of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

5 unchanged sentences

Capitalized software, net

Amortization of system development costs and acquired developed technology for three months ended March 31, 2023 and 2022 was $ 10.1 million and $ 7.4 million, respectively.

System development costs capitalized in the three months ended March 31, 2023 and 2022 were $ 10.6 million and $ 11.2 million, respectively.

Acquired developed technology was $ 48.5 million and is related to the acquisition of Digit on December 22, 2021.

Amortization of system development costs and acquired developed technology for three months ended June 30, 2023 and 2022 was $ 10.6 million and $ 8.2 million, respectively.

System development costs capitalized in the three months ended June 30, 2023 and 2022 were $ 7.7 million and $ 14.2 million, respectively.

Amortization of system development costs and acquired developed technology for six months ended June 30, 2023 and 2022 was $ 20.7 million and $ 15.6 million, respectively.

System development costs capitalized in the six months ended June 30, 2023 and 2022 were $ 18.3 million and $ 25.4 million, respectively.

Acquired developed technology was $ 48.5 million and is related to the acquisition of Oportun Savings (formerly known as Digit) on December 22, 2021.

Intangible Assets

The gross carrying amount and accumulated amortization, in total and by major intangible asset class are as follows:

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

5 unchanged sentences

Total intangible assets, net $ 31,330 $ 35,677

On March 8, 2023, the Company revealed its rebranding of Oportun and Digit as a single brand.

On March 8, 2023, the Company revealed its rebranding of Oportun and Oportun Savings (formerly known as Digit) as a single brand.

Therefore, the Company wrote off its $ 0.8 million Digit trademark.

Amortization of intangible assets for the three months ended March 31, 2023 and 2022 was $ 1.6 million and $ 2.0 million, respectively.

Expected future amortization expense for intangible assets as of March 31, 2023 is as follows:

Amortization of intangible assets for the three months ended June 30, 2023 and 2022 was $ 1.9 million and $ 2.0 million, respectively.

Amortization of intangible assets for the six months ended June 30, 2023 and 2022 was $ 3.5 million and $ 4.0 million, respectively.

Expected future amortization expense for intangible assets as of June 30, 2023 is as follows:

(in thousands) Fiscal Years

2023 (remaining nine months) $ 5,777

2023 (remaining six months) $ 3,860

Other assets consist of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

2 unchanged sentences

Total fixed assets, net $ 8,861 $ 10,524

Loans held for sale $ 310 $ 50

Prepaid expenses $ 19,334 $ 24,167

1 unchanged sentence

Current tax assets 8,677 8,245

Receivable from banking partner 12,289 2,878

Derivative asset 8,678 725

Other 16,599 15,848

Total other assets $ 94,200 $ 64,180

Depreciation and amortization expense related to Other Assets for the three months ended March 31, 2023 and 2022 was $ 1.3 million and $ 1.3 million, respectively.

Depreciation and amortization expense related to Other Assets for the three months ended June 30, 2023 and 2022 was $ 0.9 million and $ 1.3 million, respectively, and for the six months ended June 30, 2023 and 2022 it was $ 2.2 million, and $ 2.6 million, respectively.

The following table presents information regarding the Company's Secured Financing facilities:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Variable Interest Entity Facility Amount Maturity Date Interest Rate Balance Balance

3 unchanged sentences

$ 73,556 $ 76,574

Oportun PLW Trust 600,000 September 1, 2024 LIBOR (minimum of 0.00 %) + 2.17 %

Oportun PLW Trust 600,000 September 1, 2024 SOFR (minimum of 0.10 %) + 2.17 %

412,897 240,994

1 unchanged sentence

(1) The facility amount and maturity date on the Secured Financing - CCW facility (Oportun CCW Trust) were $ 150.0 million and December 1, 2023, respectively, as of December 31, 2022.

(2) The interest rate on the Secured Financing - CCW facility (Oportun CCW Trust) is LIBOR (minimum of 0.00 %) plus 3.41 % on the outstanding principal balance as of March 31, 2023.

(2) The interest rate on the Secured Financing - CCW facility (Oportun CCW Trust) is LIBOR (minimum of 0.00 %) plus 3.41 % on the outstanding principal balance as of June 30, 2023.

The interest rate on the CCW was LIBOR (minimum of 1.00 %) plus 6.00 % on the first $ 18.8 million of principal outstanding and LIBOR (minimum of 0.00 %) plus 3.41 % on the remaining outstanding principal balance as of December 31, 2022.

The following table presents information regarding asset-backed notes:

March 31, 2023

June 30, 2023

Variable Interest Entity Initial note amount issued (1)

35 unchanged sentences

(3) Weighted average interest rate excludes notes retained by the Company.

There were no notes retained by the Company as of March 31, 2023.

There were no notes retained by the Company as of June 30, 2023.

The weighted average interest rate for Series 2022-2 and Series 2022-3 will change over time as the notes pay sequentially (in class priority order).

2 unchanged sentences

Series 2022-2 and Series 2022-3 are both amortizing deals with no revolving period.

Asset-backed borrowings at amortized cost - On June 16, 2023, the Company entered into a forward flow whole loan sale agreement with an institutional investor.

Pursuant to this agreement, the Company has agreed to sell up to $ 300.0 million of its personal loan originations over the next twelve months.

The Company will continue to service these loans upon transfer of the receivables.

While the economics of this transaction are structured as a whole loan sale, the transfer of these loans receivable does not qualify as a sale for accounting purposes.

Accordingly, the related assets remain on the Company's balance sheet and cash proceeds received are reported as a secured borrowing under the caption of asset-backed borrowings at amortized cost with related interest expense recognized over the life of the related borrowing.

As part of this agreement, during the three months ended June 30, 2023, the Company transferred loans receivable totaling $ 25.0 million.

The following table presents information regarding the Company's Acquisition and Corporate Financings:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Entity Original Balance Maturity Date Interest Rate Balance Balance

15 unchanged sentences

On March 10, 2023 (the “Second Amendment Closing Date”), the Company amended its Corporate Financing facility by entering into an Amendment No.

2 (the “Second Amendment”) by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain affiliates of Neuberger Berman Specialty Finance as lenders, and Wilmington Trust, National Association, as administrative agent and collateral agent (the “Agent”), which amended the Credit Agreement, dated as of September 14, 2022 (as amended, supplemented or otherwise modified, including by the Second Amendment, the “Amended Credit Agreement”), by and among the Company, the lenders from time to time party thereto and the Agent.

2 (the “Second Amendment”) by and among the Company, as borrower, the subsidiaries of the Company party thereto as guarantors, certain funds associated with Neuberger Berman Specialty Finance as lenders, and Wilmington Trust, National Association, as administrative agent and collateral agent (the “Agent”), which amended the Credit Agreement, dated as of September 14, 2022 (as amended, supplemented or otherwise modified, including by the Second Amendment, the “Amended Credit Agreement”), by and among the Company, the lenders from time to time party thereto and the Agent.

On the Second Amendment Closing Date, the Company borrowed $ 20.8 million of incremental term loans (the “Incremental Tranche A-1 Loans”) and borrowed an additional $ 4.2 million of incremental term loans (the “Incremental Tranche A-2 Loans”) on March 27, 2023.

Under the Amended Credit Agreement, the Company borrowed an additional $ 25.0 million of incremental term loans (the "Incremental Tranche B Loans") on May 5, 2023 and may borrow up to an additional amount of $ 25.0 million on an uncommitted basis (the “Incremental Tranche C Loans”) expected to be available, if provided by the applicable lenders, on or about June 23, 2023.

Pursuant to the Second Amendment, the Company issued warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 Loans to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

On March 27, 2023, in connection with the funding of the Incremental Tranche A-2 Loans, the Company issued Warrants to the lenders providing the Incremental Tranche A-2 Loans to purchase 116,485 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

On May 5, 2023, under the Amended Credit Agreement, the Company borrowed an additional $ 25.0 million of incremental term loans (the "Incremental Tranche B Loans") and issued Warrants to the lenders to purchase 1,048,363 shares of the Company's common stock at an exercise price of $ 0.01 per share.

The Company determined that the terms of the new debt instrument upon issuance of Tranche B was substantially different when compared to the Original Credit Agreement resulting in an insignificant net loss on debt extinguishment.

Accordingly, the Company extinguished the carrying value of the corporate financing facility prior to issuance of Tranche B and recorded the new corporate financing facility upon issuance of Tranche B at fair value of $ 179.5 million.

This resulted in an insignificant net loss on extinguishment.

On June 30, 2023, under the Amended Credit Agreement, the Company borrowed an additional $ 25.0 million of incremental term loans (the "Incremental Tranche C Loans") and issued Warrants to the lenders to purchase 1,048,363 shares of the Company's common stock at an exercise price of $ 0.01 per share.

The loans (the “Loans”) and other obligations under the Amended Credit Agreement are secured by the assets of the Company and certain of its subsidiaries guaranteeing the Loans, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by the Company, subject to customary exceptions.

2 unchanged sentences

Certain prepayments of the Loans are subject to a prepayment premium.

Pursuant to the Amended Credit Agreement, as of the three months ended March 31, 2023, the Company issued warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 and Incremental Tranche A-2 Loans.

The Company allocated proceeds from the incremental borrowings of the Corporate Financing facility to the Corporate Financing facility and the Warrants based on their relative fair values at time of issuance.

The value of the proceeds allocated to the Corporate Financing facility, net of discount, and the Warrants in the first quarter 2023, was $ 17.8 million and $ 6.7 million, respectively.

The value of the Warrants are accounted for as a discount on the incremental borrowings and will be amortized into interest expense over the term of the loans using the effective interest method.

In addition, pursuant to the Amended Credit Agreement, on May 5, 2023, the Company issued to the lenders providing the Incremental Tranche B Loans warrants to purchase 1,048,363 shares of the Company’s common stock, at an exercise price of $ 0.01 per share.

There may be further warrants issued to the lenders in connection with the potential future incremental tranche loans described above.

See Note 10, Stockholders' Equity for additional information on the Warrants.

As of March 31, 2023, and December 31, 2022, the Company was in compliance with all covenants and requirements of the Secured Financing, Acquisition and Corporate Financing facilities and asset-backed notes.

As of June 30, 2023, and December 31, 2022, the Company was in compliance with all covenants and requirements of the Secured Financing, Acquisition and Corporate Financing facilities and asset-backed notes.

Other Liabilities

Other liabilities consist of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

5 unchanged sentences

Deferred tax liabilities 4,514 30,575

Current tax liabilities and other 9,482 9,570

Current tax liabilities 6,802 5,912

Other 3,350 3,658

Total other liabilities $ 78,175 $ 100,028

1 unchanged sentence

Preferred Stock - The Board has the authority, without further action by the Company's stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Board.

There were no shares of undesignated preferred stock issued or outstanding as of March 31, 2023 or December 31, 2022.

Common Stock - As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $ 0.0001 per share.

As of March 31, 2023, 34,156,369 and 33,884,346 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

There were no shares of undesignated preferred stock issued or outstanding as of June 30, 2023 or December 31, 2022.

Common Stock - As of June 30, 2023 and December 31, 2022, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $ 0.0001 per share.

As of June 30, 2023, 34,299,366 and 34,027,343 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

As of December 31, 2022, 33,626,630 and 33,354,607 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

Warrants - On March 10, 2023, pursuant to the Second Amendment of the Corporate Financing facility, the Company issued detachable warrants (the “Warrants”) to the lenders providing the Incremental Tranche A-1 Loans to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

Warrants - On March 10, 2023, pursuant to the Second Amendment of the Corporate Financing facility, the Company issued detachable Warrants to the lenders providing the Incremental Tranche A-1 Loans to purchase 1,980,242 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

On May 5, 2023, in connection with the funding of the Incremental Tranche B Loans, the Company issued Warrants to the lenders providing the Incremental Tranche B loans to purchase 1,048,363 shares of the Company's common stock at an exercise prices of $ 0.01 per share.

In addition, in connection with the funding of the Incremental Tranche C Loans, the Company will issue Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

The value of the proceeds allocated to the Corporate Financing facility and the Warrants in the first quarter 2023 was $ 17.8 million and $ 6.7 million, respectively.

The portion of the proceeds so allocated to the warrants has been recorded as part of additional paid-in capital.

On June 30, 2023, in connection with the funding of the Incremental Tranche C Loans, the Company issued Warrants to the lenders providing the Incremental Tranche C Loans to purchase 1,048,363 shares of the Company’s common stock at an exercise price of $ 0.01 per share.

See Note 8, Borrowings for additional information on the Second Amendment of the Corporate Financing facility.

1 unchanged sentence

The Company's stock-based plans are described and informational disclosures are provided in the Notes to the Consolidated Financial Statements included in the Annual Report.

Stock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

S tock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

$ 4,469 $ 6,929 $ 9,347 $ 13,702

(1) Amounts shown are net of $ 0.5 million of capitalized stock-based compensation for the three months ended March 31, 2023 and net of $ 0.7 million of capitalized stock-based compensation for the three months ended March 31, 2022.

As of March 31, 2023, and December 31, 2022, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $ 4.9 million and $ 6.2 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.3 years and 2.6 years, respectively.

As of March 31, 2023 and December 31, 2022, the Company's total unrecognized compensation cost related to unvested restricted stock unit awards granted to employees was $ 39.2 million and $ 51.6 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.8 years and 2.7 years, respectively.

Cash flows from the tax benefits for tax deductions resulting from the exercise of stock options in excess of the compensation expense recorded for those options (excess tax benefits) are required to be classified as cash from financing activities.

The Company recognized $ 1.4 million and $ 2.0 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

Additionally, the total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $ 2.4 million and $ 0.7 million for the three months ended March 31, 2023 and 2022, respectively.

(1) Amounts shown are net of $ 0.3 million and $ 0.7 million of capitalized stock-based compensation for the three and six months ended June 30, 2023, respectively, and net of $ 0.7 million and $ 1.4 million of capitalized stock-based compensation for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, and December 31, 2022, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $ 4.1 million and $ 6.2 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.2 years and 2.6 years, respectively.

As of June 30, 2023 and December 31, 2022, the Company's total unrecognized compensation cost related to unvested restricted stock unit awards granted to employees was $ 30.9 million and $ 51.6 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.5 years and 2.7 years, respectively.

Cash flows from the tax shortfalls or benefits for tax deductions resulting from the exercise of stock options in comparison to the compensation expense recorded for those options are required to be classified as cash from financing activities.

The Company recognized $ 2.6 million and $ 4.0 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense during the six months ended June 30, 2023 and 2022, respectively.

Additionally, the total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $ 0.3 million and $ 2.7 million for the three and six months ended June 30, 2023, respectively.

The total income tax expense (benefit) recognized in the income statement for share-based compensation exercises was $ 0.2 million and $ 0.9 million for the three and six months ended June 30, 2022, respectively.

Interest Income - Total interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

Non-interest Income - Total non-interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

Total non-interest income $ 26,100 $ 18,147 $ 47,993 $ 40,630

For the three months ended March 31, 2023 and 2022, the Company calculates its year-to-date income tax expense (benefit) by applying the estimated annual effective tax rate to the year-to-date income from operations before income taxes and adjusts the income tax expense (benefit) for discrete tax items recorded in the period.

During the three months ended March 31, 2023 and 2022, the Company recorded income tax expense (benefit) of $( 39.4 ) million and $ 12.0 million, respectively, related to continuing operations.

The Company’s reported effective tax rates were 27.9 % and 20.8 % for the three months ended March 31, 2023 and 2022, respectively.

Income tax expense decreased by $ 51.4 million or 428.5 % , from $ 12.0 million for the three months ended March 31, 2022 to $ 39.4 million benefit for the three months ended March 31, 2023, primarily as a result of having a pretax loss for the three months ended March 31, 2023.

Our effective tax rates for the three months ended March 31, 2023 and 2022 differ from the statutory tax rates primarily due to the impacts of the research and development tax credit and a one-time exercise of stock-based awards.

For the three and six months ended June 30, 2023 and 2022, the Company calculates its year-to-date income tax expense (benefit) by applying the estimated annual effective tax rate to the year-to-date income from operations before income taxes and adjusts the income tax expense (benefit) for discrete tax items recorded in the period.

During the three and six months ended June 30, 2023, the Company recorded income tax benefit of $ 2.6 million and $ 42.0 million, respectively, related to continuing operations, representing an effective income tax rate of 14.7 % and 26.4 %, respectively.

Income tax expense (benefit) for the three and six months ended June 30, 2022 was $( 3.5 ) million and $ 8.5 million, respectively, representing an effective income tax rate of 27.7 % and 18.9 %, respectively.

Income tax benefit decreased by $ 0.9 million or 27 %, from $ 3.5 million for the three months ended June 30, 2022 to $ 2.6 million benefit for the three months ended June 30, 2023, primarily resulting from having lower pretax income and discrete tax expense for the three months ended June 30, 2023.

Income tax expense decreased by $ 50.5 million or 595 %, from $ 8.5 million for the six months ended June 30, 2022 to $( 42.0 ) million for the six months ended June 30, 2023, primarily resulting from having lower pretax income and discrete tax expense associated with stock-based compensation for the six months ended June 30, 2023.

The Company's effective tax rates for the three and six months ended June 30, 2023 and 2022 differ from the statutory tax rates primarily due to the impacts of a one-time exercise of stock-based awards and research and development tax credits.

It is reasonably possible that the balance of gross unrecognized tax benefits could change in the next twelve months, although the timing of the resolution and/or closure of audits is highly uncertain.

Given the number of years remaining subject to examination and the number of matters being examined, the Company is unable to estimate a range at this time.

Fair Value of Financial Instruments

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The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances for the periods shown:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in thousands) Unpaid Principal Balance Fair Value Unpaid Principal Balance Fair Value

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The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value.

The personal loan receivables balance at fair value as of March 31, 2023, consists of $ 2,771.0 million of unsecured personal loan receivables and $ 131.1 million of secured personal loan receivables.

March 31, 2023 December 31, 2022

The personal loan receivables balance at fair value as of June 30, 2023, consists of $ 2,742.7 million of unsecured personal loan receivables and $ 129.1 million of secured personal loan receivables.

June 30, 2023 December 31, 2022

Personal Loans Receivables Minimum Maximum Weighted Average (2)

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(2) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of customer, original loan maturity terms).

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Credit Card Receivables Range Range

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(1) Figure disclosed as a percentage of outstanding principal balance.

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the three months ended March 31, 2023 and 2022.

The Company has derivative instruments in connection with its bank partnership program with Pathward, N.A.

related to excess interest proceeds it expects to receive on loans retained by Pathward, N.A.

Based on the agreement underlying the bank partnership program, for all loans originated and retained by Pathward, Pathward receives a fixed interest rate.

The Company bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreement.

The fair value of the derivative instrument was $ 8.7 million as of June 30, 2023.

The underlying cash flows were $ 11.8 million as of June 30, 2023.

The fair value of the derivative instrument and underlying cash flows were not material as of December 31, 2022.

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for derivative instruments presented within Other Assets in the Condensed Consolidated Balance Sheets (Unaudited):

June 30, 2023*

Low High Weighted Average

Remaining cumulative charge-offs 3.71 % 18.31 % 9.11 %

Remaining cumulative prepayments — % 34.87 % 23.75 %

Average life (years) 0.34 1.56 1.28

Discount rate 24.00 % 24.00 % 24.00 %

* Inputs as of December 31, 2022 were not disclosed as the balance was not yet material

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the six months ended June 30, 2023 and 2022.

Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input.

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Similar to the model used for personal loan receivables, the Company engaged a third party to create an independent fair value estimate, which provides a range of fair values that are compared for reasonableness.

For the derivative, the Company uses a base set of cash flows derived from historical data and management assumptions.

From this base set of cash flows, funds that are projected to be released to the Company according to the contractual terms outlined in the waterfall agreement are calculated on an aggregate basis then discounted at a rate that is representative of equity yield.

The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

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Balance – end of period $ 2,985,129 $ 2,854,594 $ 2,985,129 $ 2,854,594

As of March 31, 2023, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 7.6 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 38.5 million.

As of June 30, 2023, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 10.0 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 39.1 million.

As of December 31, 2022, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 4.1 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 35.2 million.

During the first quarter of 2023, under the Amended Credit Agreement of the Corporate Financing facility, the Company borrowed an additional $ 20.8 million on March 10, 2023 and an additional $ 4.2 million on March 27, 2023.

Pursuant to the Second Amendment, the Company issued warrants (the “Warrants”) to the lenders providing these incremental borrowings.

The value of the proceeds allocated to the Corporate Financing facility and the Warrants in the first quarter of 2023 was $ 17.8 million and $ 6.7 million, respectively.

Pursuant to the Second Amendment of the Corporate Financing facility, the Company issued detachable warrants to the lenders.

See Note 8, Borrowings for additional information on the Second Amendment of the Corporate Financing facility and Note 10, Stockholders' Equity for additional information on the warrants.

The fair value of the non-recurring (level 3) incremental borrowings upon issuance were estimated using a discounted cash flow analysis.

The fair value of the of non-recurring (Level 3) warrants to purchase shares of the Company’s common stock were estimated using a Black Scholes valuation model with the following significant unobservable inputs at the date of issuance:

June 30, 2023

Expected Term (years) 5.0

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The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value hierarchy:

March 31, 2023

June 30, 2023

Carrying value Estimated fair value Estimated fair value

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Secured financing (Note 8) 488,160 476,569 — 476,569 —

Asset-backed borrowings at amortized cost (Note 8) (1)

24,920 24,920 — — 24,920

Acquisition and corporate financing (Note 8) 302,141 301,755 — 301,755 —

(1) The Company estimates the fair value of the asset-backed borrowings at amortized cost to approximate par value as of June 30, 2023 given the close proximity of the transaction to quarter end.

December 31, 2022

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• Loans held for sale ‑ The fair values of loans held for sale are based on a negotiated agreement with the purchaser.

• Secured financing and acquisition and corporate financing ‑ The fair values of the secured financing and acquisition and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

There were no transfers in or out of Level 3 assets and liabilities for the three months ended March 31, 2023 and 2022 and the year ended December 31, 2022.

• Secured financing, acquisition and corporate financing ‑ The fair values of the secured financing, and acquisition and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

• Asset-backed borrowings at amortized cost ‑ The fair values of the asset-backed borrowings at amortized cost have been calculated by discounting the contractual cash flows at the interest rate the Company estimates such arrangement would bear if executed in the current market, which is a Level 3 input measure.

There were no transfers in or out of Level 3 assets and liabilities for the three and six months ended June 30, 2023 and 2022 and the year ended December 31, 2022.

Leases, Commitments and Contingencies

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The Company uses its contractual borrowing rate to determine lease discount rates.

As of March 31, 2023, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:

As of June 30, 2023, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:

(in thousands) Operating Leases

Lease expense

2023 (remaining nine months) $ 10,354

2023 (remaining six months) $ 6,635

Total lease payments 35,092

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Weighted average discount rate 4.06 %

Rental expenses under operating leases for the three months ended March 31, 2023 and 2022, w a s $ 4.4 million and $ 4.4 million, respectively.

Rental expenses under operating leases for the three and six months ended June 30, 2023, were $ 4.7 million, and $ 9.1 million, respectively, and for the three and six months ended June 30, 2022, were $ 5.7 million, and $ 10.1 million, respectively.

Purchase Commitments ‑ The Company has commitments to purchase information technology and communication services in the ordinary course of business, with various terms through 2027.

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In accordance with the agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by Pathward based on thresholds specified in the agreements.

Lending under the partnership was launched in August of 2021 and as of March 31, 2023, the Company has a commitment to purchase an additional $ 4.9 million of program loans based on originations through March 31, 2023.

Lending under the partnership was launched in August of 2021 and as of June 30, 2023, the Company has a commitment to purchase an additional $ 15.2 million of program loans based on originations through June 30, 2023.

Whole Loan Sale Program ‑ Through March 4, 2022, the Company had a commitment to sell to a third-party institutional investor 10 % of its unsecured loan originations that satisfy certain eligibility criteria, and an additional 5 % at the Company’s sole option.

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In November 2022, the Company entered into a forward flow whole loan sale agreement with an institutional investor.

Pursuant to this agreement, the Company has a commitment to sell a minimum of

$ 2.0 million of its unsecured loan originations each month, with an option to sell an additional $ 4.0 million each month, over an approximately one-year period, subject to certain eligibility criteria.

For details regarding the whole loan sale programs, refer to Note 5, Loans Held for Sale and Loans Sold .

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at March 31, 2023 and December 31, 2022 were $ 53.2 million and $ 45.0 million, respectively.

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at June 30, 2023 and December 31, 2022 were $ 46.7 million and $ 45.0 million, respectively.

WebBank has a direct obligation to borrowers to fund such credit card commitments subject to the respective account agreements with such borrowers;

however, pursuant to the Receivables Purchase Agreement between WebBank and Oportun, Inc., the Company has the obligation to purchase receivables from WebBank representing these unfunded amounts.

Regulatory Proceedings

On March 3, 2021, the Company received a Civil Investigative Demand (CID) from the CFPB.

The stated purpose of the CID is to determine whether small-dollar lenders or associated persons, in connection with lending and debt-collection practices, have failed to comply with certain federal consumer protection laws over which the CFPB has jurisdiction.

The Company received additional information requests related to the CID.

The information requests were focused on the Company's legal collection practices from 2019 to 2021 and hardship treatments offered to members during the COVID-19 pandemic.

On September 15, 2022, the Company received a Notice and Opportunity to Respond and Advise (“NORA”) letter from the staff of the CFPB in connection with the CID, stating that it is considering whether to recommend that the CFPB take legal action against the Company based on alleged violations focused on the Company's failure to timely dismiss certain lawsuits and the hardship treatments offered during the COVID-19 pandemic, including credit reporting related thereto.

On October 14, 2022, the Company provided the CFPB with its written response to the NORA letter disputing the allegations.

On March 28, 2023, the Company announced that the CFPB had completed its investigation and concluded that it would not recommend pursuing an enforcement action against the Company.

The Company continues to believe that its business practices have been in full compliance with applicable laws.

From time to time, the Company may bring or be subject to other legal proceedings and claims in the ordinary course of business, including legal proceedings with third parties asserting infringement of their intellectual property rights, consumer litigation, and regulatory proceedings.

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Legal Proceedings for additional information regarding legal proceedings in which the Company is involved.

Related Party Transactions

On September 14, 2022, the Company entered into an agreement to borrow $ 150.0 million of a senior secured term loan with certain funds associated with Neuberger Berman Specialty Finance ("Neuberger").

On March 10, 2023, the Company upsized and amended its Corporate Financing facility and borrowed an additional $ 75.0 million over four separate tranches from March 10, 2023 to June 30, 2023.

In connection with the additional $ 75.0 million, the Company issued warrants to the lenders with each tranche to purchase a total of 4,193,453 shares of its common stock at an exercise price of $ 0.01 per share (the "Warrants").

Following the issuance of the Warrants, Neuberger is now deemed to be a beneficial owner of greater than ten percent of the Company's outstanding stock pursuant to generally accepted accounting principles.

See Note 8, Borrowings for additional information on the Second Amendment of the Corporate Financing facility and Note 10, Stockholders' Equity for additional information on the Warrants.

In addition, on June 16, 2023, the Company entered into a forward flow whole loan sale agreement with Neuberger.

Pursuant to this agreement, the Company has agreed to sell up to $ 300.0 million of its personal loan originations over the next twelve months.

The Company will continue to service these loans upon transfer of the receivables.

As part of this agreement, during the three months ended June 30, 2023, the Company transferred loans receivable totaling $ 25.0 million.

See Note 8, Borrowings - Asset-backed borrowings at amortized cost for additional information on the forward flow whole loan sale agreement.

For the three and six months ended June 30, 2023, the Company recorded interest expense under these agreements of $ 9.1 million and $ 15.4 million, respectively, primarily related to the Corporate Financing facility.

The expected cash flows are used to calculate interest expense on the secured borrowing, using the effective interest method.

The Company also recorded an insignificant amount of Interest income in the Company's Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2023 related to transferred loans.

Loans receivable at fair value underlying the secured borrowing with Neuberger was $ 24.9 million as of June 30, 2023.

The Company had Asset-backed borrowings at amortized costs of $ 25.6 million and corporate financing of $ 199.4 million due to Neuberger as of June 30, 2023.

The Company also had an insignificant amount of Interest and fee receivable, net and Other liabilities in its Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2023 related to these transactions.

The Company believes that it has executed all the transactions described herein on terms no less favorable to it than it could have obtained from unaffiliated third parties.

Subsequent Events

On May 8, 2023, the Company announced that it is taking a series of personnel and other cost saving measures to reduce expenses and streamline efficiency.

These measures include a headcount reduction of 255 employees, representing approximately 19 % of the Company's corporate staff, which excludes retail and contact center agents.

The Company also announced additional measures to reduce its expenditures on external contractors and vendors.

In relation to these and other personnel related activities, management expects to incur non-recurring, pre-tax charges of approximately $ 8.0 million in the second quarter of 2023.

The estimates of the charges and expenditures that the Company expects to incur in connection with these activities, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially from estimates.

The Company may also incur charges and expenditures not currently contemplated due to unanticipated events that may occur in connection with these measures.

Asset-backed borrowings at amortized cost - On August 3, 2023, the Company entered into a forward flow whole loan sale agreement with an institutional investor.

Pursuant to this agreement, the Company has a commitment to sell up to $ 400.0 million of its personal loan originations over the next twelve months.

The Company will continue to service these loans upon transfer of the receivables.

While the economics of this transaction are structured as a whole loan sale, the transfer of these loans receivable does not qualify as a sale for accounting purposes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements