What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 133 added, 112 removed, 535 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 81,886 $ 98,817

15 unchanged sentences

Stockholders' equity

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;

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

34,502,195 shares issued and 34,230,172 shares outstanding at September 30, 2023;

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

1 unchanged sentence

Retained earnings (accumulated deficit) ( 132,025 ) 6,102

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

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

( 6,309 ) ( 6,309 )

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

General, administrative and other 11,862 14,401 52,147 44,698

Goodwill impairment — 108,472 — 108,472

Total operating expenses 122,506 259,346 404,940 564,576

1 unchanged sentence

Income tax expense (benefit) ( 16,232 ) ( 6,536 ) ( 58,247 ) 1,956

Net income (loss) $ ( 14,899 ) $ ( 9,157 ) $ ( 116,989 ) $ 36,506

Net loss $ ( 21,138 ) $ ( 105,827 ) $ ( 138,127 ) $ ( 69,321 )

Net income (loss) attributable to common stockholders $ ( 21,138 ) $ ( 105,827 ) $ ( 138,127 ) $ ( 69,321 )

9 unchanged sentences

(in thousands, except share data)

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Common Stock Warrants

12 unchanged sentences

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

Issuance of common stock upon exercise of stock options, net of shares withheld 10,856 — 49 — — — — 49

Stock-based compensation expense — — 4,706 — — — — 4,706

Vesting of restricted stock units, net of shares withheld 191,973 — ( 652 ) — — — — ( 652 )

Issuance of warrants to purchase common stock in connection with debt financing — — — — — — — —

Net loss — — — — — ( 21,138 ) — ( 21,138 )

Balance – September 30, 2023 34,230,172 $ 7 $ 560,259 4,193,453 $ 19,431 $ ( 132,025 ) $ ( 6,309 ) $ 441,363

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share data)

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

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

11 unchanged sentences

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

Issuance of common stock upon exercise of stock options 5,261 — 29 — — 29

Stock-based compensation expense — — 7,666 — — 7,666

Vesting of restricted stock units, net of shares withheld 283,281 — ( 953 ) — — ( 953 )

Net loss — — — ( 105,827 ) — ( 105,827 )

Balance – September 30, 2022 33,188,138 $ 7 $ 540,890 $ 14,525 $ ( 6,309 ) $ 549,113

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

Net income (loss) $ ( 116,989 ) $ 36,506

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss $ ( 138,127 ) $ ( 69,321 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 41,102 34,624

Goodwill impairment — 108,472

Fair value adjustment, net 458,319 135,935

20 unchanged sentences

Borrowings under asset-backed borrowings at amortized cost 257,639 —

Repayments of asset-backed borrowings at amortized cost

Borrowings under acquisition and corporate financing 73,355 —

3 unchanged sentences

Net cash provided by (used in) financing activities ( 101,258 ) 835,781

Net decrease in cash and cash equivalents and restricted cash ( 1,482 ) ( 59,104 )

Net increase (decrease) in cash and cash equivalents and restricted cash ( 4,172 ) 79,247

Cash and cash equivalents and restricted cash, beginning of period 203,817 192,960

14 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

June 30, 2023

September 30, 2023

Organization and Description of Business

3 unchanged sentences

Oportun offers access to a comprehensive suite of digital banking products, offered either directly or through partners, including lending, savings and investing powered by A.I.

and tailored to each member's goals to make achieving financial health automated.

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

21 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

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

Net income (loss) $ ( 14,899 ) $ ( 9,157 ) $ ( 116,989 ) $ 36,506

Net loss $ ( 21,138 ) $ ( 105,827 ) $ ( 138,127 ) $ ( 69,321 )

Net income (loss) attributable to common stockholders $ ( 21,138 ) $ ( 105,827 ) $ ( 138,127 ) $ ( 69,321 )

1 unchanged sentence

Weighted average effect of dilutive securities:

Stock options — — — 453,695

Restricted stock units — — — 262,218

Diluted weighted-average common shares outstanding 38,283,071 33,010,107 36,333,570 32,688,988

3 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

6 unchanged sentences

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.

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

In addition, on June 16, 2023 and August 3, 2023, the Company entered into forward flow whole loan sale agreements that are considered secured borrowings and are not considered VIEs.

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

11 unchanged sentences

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

June 30, December 31,

September 30, December 31,

(in thousands) 2023 2022

21 unchanged sentences

The Company received $ 245.0 million of net proceeds and by selling both its notes and residual interest, the Company derecognized these loans from its Condensed Consolidated Balance Sheets (Unaudited).

Other Loan Sales - The Company enters into agreements to sell certain populations of its personal loans and credit card receivables from time to time.

Other Loan Sales - The Company enters into agreements to sell certain populations of its personal loans and credit card receivables from time to time, including non-performing loans and credit card receivables originated as held for investment.

The sold loans were accounted for under the fair value option.

5 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.

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.

On June 16, 2023 and August 3, 2023, the Company entered into forward flow whole loan sale agreements that do not qualify as a sale for accounting purposes and are 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.

The originations of loans sold and held for sale during the three months ended September 30, 2023 was $ 15.9 million and the Company recorded a gain on sale of $ 2.4 million and servicing revenue of $ 2.2 million.

The originations of loans sold and held for sale during the three months ended September 30, 2022 were insignificant.

The gain on sale recorded during the three months ended September 30, 2022 was insignificant as a result of our whole loan sale agreement expiration on March 4, 2022.

Servicing revenue during the same time period was $ 5.3 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.

The originations of loans sold and held for sale during the nine months ended September 30, 2023 was $ 41.6 million and the Company recorded a gain on sale of $ 6.1 million and servicing revenue of $ 7.7 million.

The originations of loans sold and held for sale during the nine months ended September 30, 2022 was $ 50.6 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 15.5 million.

Capitalized Software and Other Intangibles

Capitalized software, net consists of the following:

June 30, December 31,

September 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 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.

Amortization of system development costs and acquired developed technology for three months ended September 30, 2023 and 2022 was $ 10.8 million and $ 9.0 million, respectively.

System development costs capitalized in the three months ended September 30, 2023 and 2022 were $ 7.0 million and $ 13.8 million, respectively.

Amortization of system development costs and acquired developed technology for nine months ended September 30, 2023 and 2022 was $ 31.6 million and $ 24.7 million, respectively.

System development costs capitalized in the nine months ended September 30, 2023 and 2022 were $ 25.3 million and $ 39.2 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.

1 unchanged sentence

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

June 30, December 31,

September 30, December 31,

(in thousands) 2023 2022

7 unchanged sentences

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

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:

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

Amortization of intangible assets for the nine months ended September 30, 2023 and 2022 was $ 5.5 million and $ 6.0 million, respectively.

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

(in thousands) Fiscal Years

2023 (remaining six months) $ 3,860

2023 (remaining three months) $ 1,931

Other assets consist of the following:

June 30, December 31,

September 30, December 31,

(in thousands) 2023 2022

9 unchanged sentences

Total other assets $ 109,929 $ 64,180

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.

Depreciation and amortization expense related to fixed assets for the three months ended September 30, 2023 and 2022 was $ 0.9 million and $ 1.3 million, respectively, and for the nine months ended September 30, 2023 and 2022 it was $ 3.2 million, and $ 3.8 million, respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Variable Interest Entity Facility Amount Maturity Date Interest Rate Balance Balance

3 unchanged sentences

$ 71,627 $ 76,574

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

Oportun PLW Trust 600,000 September 1, 2024 Adjusted SOFR + 2.17 %

351,539 240,994

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 June 30, 2023.

(2) The interest rate on the Secured Financing - CCW facility (Oportun CCW Trust) is adjusted SOFR plus 3.41 % on the outstanding principal balance as of September 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:

June 30, 2023

September 30, 2023

Variable Interest Entity Initial note amount issued (1)

40 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.

Asset-backed borrowings at amortized cost - On June 16, 2023, and August 3, 2023, the Company entered into forward flow whole loan sale agreements and has agreed to sell up to $ 300 million and $ 400 million of its personal loan originations over the next twelve months, respectively.

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.

While the economics of these transactions 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.

As part of these agreements, as of September 30, 2023, the Company transferred loans receivable totaling $ 145.0 million and $ 105.9 million, respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Entity Original Balance Maturity Date Interest Rate Balance Balance

6 unchanged sentences

65,619 80,922

Total acquisition and corporate financing $ 266,000 $ 271,507 $ 222,879

Total acquisition and corporate financings

$ 266,000 $ 268,103 $ 222,879

(1) The Corporate Financing facility (Oportun Financial Corporation) was upsized and amended on March 10, 2023 to provide the ability to be able to borrow up to an additional $ 75.0 million.

5 unchanged sentences

This amendment, among other things, extends the revolving period by a year, to December 31, 2024, and reduces the commitment amount from $ 150.0 million to $ 120.0 million.

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

On March 10, 2023 (the “Second Amendment Closing Date”), the Company amended its Corporate Financing (Oportun Financial Corporation) 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 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.

12 unchanged sentences

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

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.

On October 20, 2023, in connection with the closing of a new private structured financing facility (the “Structured Financing Facility”), Oportun CL Trust 2023-A, as borrower, and Oportun, Inc.

and Oportun CL Depositor, LLC, each as seller and depositor, respectively, entered into a Receivables Loan and Security Agreement (the “Receivables Loan and Security Agreement”) with certain lenders from time-to-time party thereto (the “Lenders”) and Wilmington Trust, National Association as administrative agent, paying agent and account bank, pursuant to which the borrower borrowed $ 197 million.

Certain funds and affiliates of Castlelake, L.P.

(“Castlelake”) participated as Lenders under the Structured Financing Facility.

Borrowings under the Receivables Loan and Security Agreement accrue interest at a weighted average interest rate equal to 10.05 %.

As of September 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:

June 30, December 31,

September 30, December 31,

(in thousands) 2023 2022

10 unchanged sentences

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 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.

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

Common Stock - As of September 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 September 30, 2023, 34,502,195 and 34,230,172 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.

6 unchanged sentences

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.

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

$ 4,362 $ 7,050 $ 13,709 $ 20,752

(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.

(1) Amounts shown are net of $ 0.3 million and $ 1.1 million of capitalized stock-based compensation for the three and nine months ended September 30, 2023, respectively, and net of $ 0.6 million and $ 2.0 million of capitalized stock-based compensation for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, and December 31, 2022, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $ 3.2 million and $ 6.2 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.1 years and 2.6 years, respectively.

As of September 30, 2023 and December 31, 2022, the Company's total unrecognized compensation cost related to unvested restricted stock unit awards granted to employees was $ 26.8 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.

The Company recognized $ 3.8 million and $ 6.1 million of income tax benefit in its consolidated statement of operations related to stock-based compensation expense during the nine months ended September 30, 2023 and 2022, respectively.

Additionally, the total income tax expense recognized in the income statement for share-based compensation exercises was $ 0.4 million and $ 3.0 million for the three and nine months ended September 30, 2023, respectively.

The total income tax expense recognized in the income statement for share-based compensation exercises was $ 1.4 million and $ 2.4 million for the three and nine months ended September 30, 2022, respectively.

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

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

Three Months Ended September 30, Nine Months Ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2023 2022 2023 2022

Non-interest income

Gain on loan sales $ 2,341 $ ( 1 ) $ 3,667 $ 5,714

Gain on loan sales (loss)

$ 2,447 $ ( 6 ) $ 6,114 $ 5,708

Servicing fees 3,809 5,266 11,033 15,544

2 unchanged sentences

Total non-interest income $ 24,962 $ 17,961 $ 72,955 $ 58,591

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.

For the three and nine months ended September 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 nine months ended September 30, 2023, the Company recorded income tax benefit of $ 16.2 million and $ 58.2 million, respectively, related to continuing operations, representing an effective income tax rate of 43.4 % and 29.7 %, respectively.

Income tax expense (benefit) for the three and nine months ended September 30, 2022 was $( 6.5 ) million and $ 2.0 million, respectively, representing an effective income tax rate of 5.8 % and ( 2.9 )%, respectively.

Income tax benefit increased by $ 9.7 million or 148 %, from $ 6.5 million for the three months ended September 30, 2022 to $ 16.2 million benefit for the three months ended September 30, 2023, primarily as a result of having a larger pretax loss for the three months ended September 30, 2023.

Income tax expense decreased by $ 60.2 million or 3078 %, from $ 2.0 million expense for the nine months ended September 30, 2022 to $( 58.2 ) million benefit for the nine months ended September 30, 2023, primarily as a result of having a larger pretax loss for the nine months ended September 30, 2023.

The Company's effective tax rates for the three and nine months ended September 30, 2023 and 2022 differ from the statutory tax rates primarily due to the impacts of the R&D tax credit, exercise of stock-based awards, and the 2022 goodwill impairment adjustment not present in the current year.

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.

3 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

7 unchanged sentences

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 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)

The personal loans receivable balance at fair value as of September 30, 2023, consists of $ 2,702.4 million of unsecured personal loans receivable and $ 126.2 million of secured personal loans receivable.

September 30, 2023 December 31, 2022

Personal Loans Receivable

Minimum Maximum Weighted Average (2)

Remaining cumulative charge-offs (1)

6 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Credit Card Receivables Range Range

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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.

(formerly known as MetaBank, 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 was $ 16.0 million as of September 30, 2023.

The underlying cash flows were 21.8 million as of September 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*

September 30, 2023*

Low High Weighted Average

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* 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.

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the nine months ended September 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.

When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

For personal loan receivables, the Company developed an internal model to estimate the fair value of loans receivable held for investment.

For personal loans receivable, the Company developed an internal model to estimate the fair value of loans receivable held for investment.

To generate future expected cash flows, the model combines receivable characteristics with assumptions about borrower behavior based on the Company’s historical loan performance.

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For credit card receivables, the Company uses historical data to derive assumptions about certain loan portfolio characteristics such as principal payment rates, interest yields and fee yields.

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.

Similar to the model used for personal loans receivable, 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.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2023 2022 2023 2022

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Balance – end of period $ 2,940,858 $ 2,991,334 $ 2,940,858 $ 2,991,334

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 September 30, 2023, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 6.3 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 40.7 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.

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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:

June 30, 2023

September 30, 2023

Carrying value Estimated fair value Estimated fair value

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Acquisition and corporate financing (Note 8) 296,849 296,741 — 296,741 —

(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.

(1) As of September 30, 2023, the Company estimates the carrying value of asset-backed borrowings at amortized cost to approximate their fair value due to the short period of time since origination of the underlying collateral.

December 31, 2022

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• 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.

There were no transfers in or out of Level 3 assets and liabilities for the three and nine months ended September 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 June 30, 2023, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:

As of September 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 six months) $ 6,635

2023 (remaining three months) $ 3,291

Thereafter 10

Total lease payments 32,991

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Weighted average discount rate 4.06 %

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.

Rental expenses under operating leases for the three and nine months ended September 30, 2023, were $ 4.3 million, and $ 13.4 million, respectively, and for the three and nine months ended September 30, 2022, were $ 4.2 million, and $ 14.2 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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rather, they are determined based on the non-cancelable amounts to which the Company is contractually obligated.

The Company’s purchase obligations are $ 19.8 million for the remainder of 2023, $ 24.5 million in 2024, $ 16.3 million in 2025, $ 2.5 million in 2026 and $ 0.0 million in 2027 and thereafter.

The Company’s purchase obligations are $ 10.2 million for the remainder of 2023, $ 27.7 million in 2024, $ 18.8 million in 2025, $ 3.3 million in 2026 and $ 1.0 million in 2027.

Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with Pathward, N.A.

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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 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.

Lending under the partnership was launched in August of 2021 and as of September 30, 2023, the Company has a commitment to purchase an additional $ 17.7 million of program loans based on originations through September 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 June 30, 2023 and December 31, 2022 were $ 46.7 million and $ 45.0 million, respectively.

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at September 30, 2023 and December 31, 2022 were $ 44.7 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.

Mexico Value-added Tax - In October 2023, the Company's Mexico subsidiary received notice from Mexico's Servicio de Administración Tributaria, the Mexican federal tax authority, for claims related to the alleged underpayment of value-added tax, including inflationary adjustments, fines and penalties for tax years 2017-2019.

The Company disputes that there were underpayments in any of those years, and intends to pursue all available administrative and legal avenues of appeal to assert its position.

No accrual related to this matter has been recorded as of September 30, 2023, as the Company believes it is not probable to be incurred.

However, it is reasonably possible the Company will be unsuccessful in asserting at least some of these claims, and for those claims, the Company believes it may be exposed to a liability ranging from zero to $ 1.5 million, consisting of $ 0.5 million of value-added tax and $ 1.0 million of inflationary adjustments, fines and penalties.

These estimates are subject to change based on the results of the administrative and legal appeal processes, however, timing of the resolution of this issue is unknown.

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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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.

As part of this agreement, during the three and nine months ended September 30, 2023 the Company transferred loans receivable totaling $ 120.0 million and $ 145.0 million, respectively.

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.

For the three and nine months ended September 30, 2023, the Company recorded interest expense under these agreements of $ 14.5 million and $ 29.9 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 also recorded $ 6.7 million and $ 6.9 million of interest income in the Company's Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2023 related to transferred loans.

Loans receivable at fair value underlying the secured borrowing with Neuberger was $ 138.9 million as of September 30, 2023.

The Company had Asset-backed borrowings at amortized costs of $ 140.5 million and corporate financing of $ 202.5 million due to Neuberger as of September 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 September 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

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.

On November 6, 2023, the Company announced that it is taking a series of measures to streamline its operations, including reducing the size of its corporate staff by approximately 18 %, impacting approximately 185 employees, and reducing its expenditures on external contractors.

In relation to these and other personnel related activities, management expects to incur non-recurring, pre-tax charges of $ 7 to $ 8 million in the fourth quarter of 2023.

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