Oportun Financial Corp 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations An index to our management's discussion and analysis follows: Topic Forward-Looking Statements 24 Overview 25 Key Financial and Operating Metrics 26 Historical Credit Performance 28 Results of Operations 30 Fair Value Estimate Methodology for Loans Receivable at Fair Value 36 Non-GAAP Financial Measures 36 Liquidity and Capital Resources 39 Critical Accounting Policies and Significant Judgments and Estimates 43 Recently Issued Accounting Pronouncements 43 You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this report and the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, on February 20, 2025, as amended . Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-Looking Statements This report contains forward-looking statements, within the meani ng of the Private Securities Litigation Reform Act of 1995, Sec tion 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements include, but are not limited to, statements about: • our future financial performance, including our expectations regarding our revenue, our operating expenses and our ability to achieve and maintain profitability; • our ability to increase the volume of loans we make; • our ability to manage loan non-performance, delinquencies and charge-off rates, and identify high-quality originations; • our ability to effectively estimate the fair value of our loans receivable held for investment and our asset-backed notes; • our expectations regarding the effect of and trends in fair value mark-to-market adjustments on our loan portfolio and asset-backed notes; • our expectations and management of future growth, including expanding our markets served, member base and product and service offerings, and realizing the benefits and synergies from acquisitions; • our ability to successfully adjust our proprietary credit risk models and products in response to changing macroeconomic conditions and fluctuations in the credit market; • our ability to successfully manage our interest rate spread against our cost of capital; • our expectations regarding the sufficiency of our cash to meet our operating and cash expenditures; • our plans for and our ability to successfully maintain our diversified funding strategy, including warehouse facilities, loan sales and securitization transactions; • our ability to obtain any additional financing or any refinancing of our debt; • our expectation regarding the transfer of certain loans receivable; • our ability to realize the expected benefits from reductions in workforce and other streamlining measures, including our estimate of the changes and expenditures; • our expectations regarding our costs and seasonality; 24 • our ability to successfully build our brand and protect our reputation from negative publicity; • our ability to increase the effectiveness of our marketing efforts; • our ability to grow market share in existing markets or any new markets we may enter; • our ability to continue to expand our demographic focus; • our ability to maintain or expand our relationships with our current partners, including bank partners, and our plans to acquire additional partners using our Lending as a Service model; • our ability to provide an attractive and comprehensive member experience, and further our position as a financial services company; • our ability to maintain the terms on which we lend to our borrowers; • our ability to manage fraud risk, including regulatory intervention and impacts on our brand reputation; • our ability to develop our technology, including our artificial intelligence (“A.I.”) enabled digital platform; • our ability to effectively secure and maintain the confidentiality of the information provided and utilized across our systems; • our ability to detect and protect our systems against unauthorized access, use or disclosure of sensitive information; • our ability to successfully compete with companies that are currently in, or may in the future enter, the markets in which we operate; • our ability to attract, integrate and retain qualified employees; • our ability to manage impacts from, and uncertainties regarding, current and future actions that may be taken by activist stockholders • the effect of macroeconomic conditions on our business, including the impact of tariffs and other non-tariff trade barriers, fluctuating interest rates, and inflation; • our ability to effectively manage and expand the capabilities of our contact centers, outsourcing relationships and other business operations abroad; and • our ability to successfully adapt to complex and evolving regulatory environments, including managing potential exposure in connection with new and pending investigations, proceedings and other contingencies. Forward-looking statements are based on our management’s current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and on our management’s beliefs and assumptions. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information. We anticipate that subsequent events and developments may cause our views to change. Forward-looking statements do not guarantee future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this report. We also operate in a rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. As a result, any or all of our forward-looking statements in this report may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. You should read this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. These forward-looking statements speak only as of the date of this report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements. As used in this report, the terms “Oportun Financial Corporation,” “Oportun,” “Company,” “we,” “us,” and “our” mean Oportun Financial Corporation and its subsidiaries unless the context indicates otherwise. Overview We are a mission-driven financial services company that puts our members’ financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, we empower members with the confidence to build a better financial future . By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our business is well positioned for significant growth in the future. We take a holistic approach to serving our members and view it as our purpose to responsibly meet their current capital needs, help grow our members’ financial profiles, increase their financial awareness and put them on a path to a financially healthy life. In our 19-year lending history, we have extended more than $20.8 billion in responsible credit through more than 7.7 million loans and credit cards . We have been certified as a Community Development Financial Institution ("CDFI") by the U.S. Department of the Treasury since 2009. We offer access to a suite of financial products, offered either directly or through partners, including unsecured and secured lending and savings. 25 Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to our members. Our credit products include unsecured and secured personal loans. We also offer automated savings, through our Set & Save platform. Consumers are able to become members and access our products through the Oportun Mobile App and the Oportun.com website, which are our primary channels for onboarding and serving members. As of June 30, 2025, our personal loan products are also available over the phone or through our 127 retail locations, and 475 of our Lending as a Service partner locations. Credit Products Personal Loans - Our personal loan is a simple-to-understand, affordable, unsecured, fully amortizing installment loan with fixed payments throughout the life of the loan. We charge fixed interest rates on our loans, which vary based on the amount disbursed and applicable state law, with a cap of 36% annual percentage rate (“APR”) in all cases. As of June 30, 2025, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 39 months and 34.8%, respectively. The average loan size for loans we originated during the three months ended June 30, 2025 was $2,937. Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $10,000 with terms of 12 to 54 months. Generally, loan payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of income. As part of our underwriting process, we verify income for all applicants and only approve loans that meet our ability-to-pay criteria. As of June 30, 2025, we originated unsecured personal loans in 3 states through state licenses and in 38 states through our partnership with Pathward, N.A. Secured Personal Loans - We also offer a personal installment loan product secured by an automobile, which we refer to as secured personal loans. Our secured personal loans range in size from $2,525 to $18,500 with terms ranging from 24 to 64 months. The average loan size for secured personal loans we originated during the three months ended June 30, 2025 was $6,333. As of June 30, 2025, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 47 months and 32.5%, respectively. As part of our underwriting process, we evaluate the collateral value of the vehicle, verify income for all applicants and only approve loans that meet our ability-to-pay criteria. Our secured personal loans are currently offered in 8 states and we are in the process of expanding into other states. Set & Save Savings – Our Set & Save product is designed to understand a member’s cash flows and save the right amount on a regular basis to effortlessly achieve savings goals. Members link their bank account with the platform and Set & Save utilizes mac hine learning to analyze a member’s transaction activity and build forecasts of the member’s future cash flows to make small, frequent savings decisions according to the member’s financial goals in a personalized manner. Since 2015, our savings product has helped members save more than $11.9 billion and helped our members save an average of more than $1,800 annually. The funds in these savings accounts are owned by members of our products and are not the assets of the Company. Therefore, these funds are not included in the Condensed Consolidated Balance Sheets (Unaudited) . Lending as a Service Beyond our core direct-to-consumer lending business, we leverage our proprietary credit scoring and underwriting model to partner with other consumer brands and expand our member base. For example, we have partnered with DolFinTech in certain of their locations where they provide us with information for potential members and we are able to offer loans through our existing channels by phone, online, or in our retail locations. In addition, we have entered into a collaboration with Western Union. As part of these programs, Oportun originates, underwrites, and services the loan. We believe we will be able to offer our Lending as a Service Lead Generation program to additional partners with a much faster lead-to-market time, expanding our membership base while offering a true Oportun service experience. Capital Markets Funding To fund our growth at a low and efficient cost, we have built a diversified and well-established capital markets funding program, which allows us to partially hedge our exposure to rising interest rates or credit spreads by locking in our interest expense. Since 2015, we have participated in 25 sponsored or co-sponsored amortizing and revolving bond offerings in the asset-backed securities market, all of which include tranches that have been rated investment grade. We have issued one-, two- and three-year fixed rate bonds which have provided us committed capital to fund future loan originations at a fixed Cost of Debt. Additionally, we have entered into certain agreements with institutional investors to sell a portion of our loans as part of structured and whole loan agreements. Refer to Liquidity and Capital Resources in Item 2. " Management's Discussion and Analysis of Financial Condition and Results of Operations " for information regarding these transactions. Key Financial and Operating Metrics We monitor and evaluate the following key metrics in order to measure our current performance, develop and refine our growth strategies, and make strategic decisions. 26 As of or for the Three Months Ended June 30, As of or for the Six Months Ended June 30, (in thousands of dollars) 2025 2024 2025 2024 Key Financial and Operating Metrics Aggregate Originations $ 480,761 $ 434,766 $ 950,156 $ 772,981 Portfolio Yield 32.8 % 33.9 % 32.9 % 33.2 % 30+ Day Delinquency Rate 4.4 % 5.0 % 4.4 % 5.0 % Annualized Net Charge-Off Rate 11.9 % 12.3 % 12.0 % 12.2 % Other Metrics (1) Managed Principal Balance at End of Period $ 2,939,765 $ 2,997,798 $ 2,939,765 $ 2,997,798 Owned Principal Balance at End of Period $ 2,636,407 $ 2,718,988 $ 2,636,407 $ 2,718,988 Average Daily Principal Balance $ 2,666,793 $ 2,745,667 $ 2,685,899 $ 2,798,654 (1) As of June 30, 2024, Managed Principal Balance at End of Period, and Owned Principal Balance at End of Period included credit card amounts of $94.9 million, $94.5 million, respectively. Average Daily Principal Balance for the three and six months ended June 30, 2024, included credit card amounts of $98.0 million and $102.8 million, respectively. On November 12, 2024, the Company completed the sale of its credit cards receivable portfolio to a third-party credit card marketer and servicer. See “ Glossary ” at the end of Part II of this report for formulas and definitions of our key performance metrics. Aggregate Originations Aggregate Originations increased to $480.8 million for the three months ended June 30, 2025 from $434.8 million for the three months ended June 30, 2024, representing a 10.6% increase. The increase is primarily driven by a 23,424 increase in the number of loans originated primarily driven by an increase in application volume, which was partially offset by a reduction in average loan size from $3,261 to $3,067 for the three months ended June 30, 2024 and June 30, 2025, respectively. We originated 156,734 and 133,310 loans for the three months ended June 30, 2025 and 2024, respectively. Aggregate Originations increased to $950.2 million for the six months ended June 30, 2025 from $773.0 million for the six months ended June 30, 2024, representing an 22.9% increase. The increase is primarily driven by a 68,080 increase in the number of loans originated, which was partially offset by a reduction in average loan size from $3,339 to $3,172 for the six months ended June 30, 2024 and June 30, 2025, respectively. We originated 299,577 and 231,497 loans for the six months ended June 30, 2025 and 2024, respectively. Portfolio Yield Portfolio yield decreased to 32.8% for the three months ended June 30, 2025, from 33.9% for the three months ended June 30, 2024, and decreased to 32.9% for the six months ended June 30, 2025, from 33.2% for the six months ended June 30, 2024, primarily attributable to timing differences in changes in origination fee. 30+ Day Delinquency Rate Our 30+ Day Delinquency Rate was 4.4% and 5.0% as of June 30, 2025 and 2024, respectively. The decrease was primarily due to improved credit performance as a result of our incremental credit tightening efforts beginning with significantly tightened underwriting standards in 2022, as shown by a 30 basis point improvement in our back book, originations made prior to our significant credit-tightening in July 2022, 30+ day delinquency rate. Annualized Net Charge-Off Rate Annualized Net Charge-Off Rate for the three months ended June 30, 2025 and 2024 was 11.9% and 12.3%, respectively, down 41 basis points . The decrease is primarily driven by a $4.9 million decrease in Net Charge-offs , partially offset by a decrease in our Average Daily Principal balance by $78.9 million, primarily due to the sale of the credit card portfolio, from $2.75 billion to $2.67 billion for the three months ended June 30, 2024 and June 30, 2025, respectively . Annualized Net Charge-Off Rate for the six months ended June 30, 2025 and 2024 was 12.0% and 12.2%, respectively , down 13 basis points. While the Annualized Net Charge-off Rate decreased for the three months ended June 30, 2025 and six months ended June 30, 2025, actual net charge-offs decreased by $4.9 million and $9.0 million , respectively. This improvement was a result of significantly tightening underwriting standards in the second half of 2022 and continued 2023 efforts to tighten credit standards throughout the second half of 2023. Beginning in July 2022, we took numerous actions to improve the credit performance on newly originated loans, including significantly tightening our underwriting standards for all borrowers, particularly for higher risk digital marketing channels, and adjusting loan size based on member free cash flow. We also focused lending towards existing and returning members to improve credit outcomes as existing and returning members historically have had lower loss rates. We refer to the post-July 2022 underwriting vintages as our front book and the originations made prior to our significant credit-tightening in July 2022 we refer to as the back book. As the average life of our loans is only one year, we expect the back book to become less impactful on our losses going forward. 27 Historical Credit Performance Our Annualized Net Charge-off Rate ranged between 7% and 10.1% from 2014 to 2022. In 2020, during the pandemic, our Annualized Net Charge-off Rate was 9.8%. Due to credit tightening in response to the COVID-19 pandemic and government stimulus payments, our Annualized Net Charge-Off Rate decreased to 6.8% in 2021. Our Annualized Net Charge-off Rate increased to 10.1% in 2022 primarily due to an increasing interest rate environment, inflation and the cessation of COVID-19 stimulus payments and a higher mix of first-time borrowers in 2021 and the first half of 2022. In response to this increase, in the second half of 2022 and continuing throughout 2023 and 2024, we tightened our credit underwriting standards and focused lending towards existing and returning members to improve credit outcomes. The Annualized Net Charge-Off Rate for the three months ended June 30, 2025 and 2024 was 11.9% and 12.3%, respectively. The decrease was primarily driven by a $4.9 million decrease in Net Charge-offs , partially offset by a decrease in our Average Daily Principal balance by $78.9 million, primarily due to the sale of the credit card portfolio, from $2.75 billion to $2.67 billion for the three months ended June 30, 2024 and June 30, 2025, respectively . For the six months ended June 30, 2025, the back book continued to season and made-up 10% of gross charge-offs while only making up approximately 2% of the loans receivable. We evaluate our loan portfolio and charge a loan off at the earlier of when the loan is determined to be uncollectible. or when loans are 120 days contractually past due. *Numbers shown reflect year-to-date amounts for the six months ended June 30, for the indicated fiscal year. In addition to monitoring our loss and delinquency performance on an owned portfolio basis, we also monitor the performance of our loans by the period in which the loan was disbursed, generally years or quarters, which we refer to as a vintage. We calculate net lifetime loan loss rate by vintage as a percentage of original principal balance. Net lifetime loan loss rates equal the net lifetime loan losses for a given year through June 30, 2025 divided by the total origination loan volume for that year. The below chart and table show our net lifetime loan loss rate for each annual vintage of our personal loan product since 2014, excluding loans originated from July 2017 to August 2020 and from December 2023 under a loan program for borrowers who did not meet the qualifications for our core loan origination program; 100% of those loans were sold pursuant to a whole loan sale agreement. Cumulative net lifetime loan losses for the 2015, 2016, 2017, and 2018 vintages increased partially due to the delay in tax refunds in 2017 and 2019, the impact of natural disasters such as Hurricane Harvey, and the longer duration of the loans. The 2018 and 2019 vintages are increasing due to the COVID-19 pandemic. The 2021 vintage is experiencing higher charge-offs than prior vintages primarily due to a higher percentage of loan disbursements to new members. We tightened credit, reduced loan size and loan term, and began reducing loan volumes to new and returning members beginning in the third quarter of 2022. Net Lifetime Loan Loss Rates on vintages originated since significant July 2022 credit tightening are performing near comparable vintages originated in 2019 for the first 7 to 9 months on books but start to diverge due to underperformance of larger loans relative to 2019 and due to longer average term length. In the second half of 2023 we did further tightening and shortened average term length which resulted in stronger performance of the 2023 vintages in the second half of the year as compared to the 2022 vintages for the same period. Higher costs for food, fuel, and rent along with macro-economic uncertainty have also put pressure on our members. We employ collection strategies and tools to help customers make ongoing payments against their loans, with new efforts launched that: expanded the frequency and content of our digital and telephony communications; broadened eligibility for collection tools that help customers address payment difficulties; and eased customer access to those collection tools via new online and mobile app self-enrollment capability, supported by a new collections strategy system that enables centralized, faster, and more-targeted application of strategies. 28 Year of Origination 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Dollar weighted average original term for vintage in months 22.3 24.2 26.3 29.0 30.0 32.0 33.3 37.8 39.2 35.6 Net lifetime loan losses as of June 30, 2025 as a percentage of original principal balance 7.1% 8.0% 8.2% 9.8% 10.8% 9.0%* 18.3%* 20.8%* 10.8%* 1.5%* Outstanding principal balance as of June 30, 2025 as a percentage of original amount disbursed —% —% —% —% 0.1% 0.3% 1.7% 12.7% 41.8% 79.5% * Vintage is not yet fully mature from a loss perspective. Seasonality Our quarterly results of operations may not necessarily be indicative of the results for the full year or the results for any future periods. We experience significant seasonality in demand for our loans, which is generally lower in the first quarter. The seasonal slowdown is primarily attributable to high loan demand around the holidays in the fourth quarter and the general increase in our borrowers’ available cash flow in the first quarter, including from cash received from tax refunds, temporarily reducing our borrowers’ borrowing needs. 29 Results of Operations The following tables and related discussion set forth our Condensed Consolidated Statements of Operations (Unaudited) for each of the three and six months ended June 30, 2025 and 2024. Three Months Ended June 30, Six Months Ended June 30, (in thousands of dollars) 2025 2024 2025 2024 Revenue Interest income $ 218,281 $ 231,373 $ 438,502 $ 461,963 Non-interest income 16,065 19,023 31,748 38,915 Total revenue 234,346 250,396 470,250 500,878 Less: Interest expense 59,538 54,244 116,941 108,709 Total net decrease in fair value (70,257) (136,119) (142,929) (252,969) Net revenue 104,551 60,033 210,380 139,200 Operating expenses: Technology and facilities 36,649 40,625 73,086 87,730 Sales and marketing 18,077 16,258 37,959 32,261 Personnel 20,247 21,908 41,212 46,424 Outsourcing and professional fees 9,701 8,375 17,713 18,616 General, administrative and other 9,769 22,016 17,143 33,793 Total operating expenses 94,443 109,182 187,113 218,824 Income (loss) before taxes 10,108 (49,149) 23,267 (79,624) Income tax expense (benefit) 3,231 (18,124) 6,623 (22,160) Net income (loss) $ 6,877 $ (31,025) $ 16,644 $ (57,464) Total revenue Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Revenue Interest income $ 218,281 $ 231,373 $ (13,092) (5.7) % $ 438,502 $ 461,963 $ (23,461) (5.1) % Non-interest income 16,065 19,023 (2,958) (15.5) % 31,748 38,915 (7,167) (18.4) % Total revenue $ 234,346 $ 250,396 $ (16,050) (6.4) % $ 470,250 $ 500,878 $ (30,628) (6.1) % Percentage of total revenue: Interest income 93.1 % 92.4 % 93.2 % 92.2 % Non-interest income 6.9 % 7.6 % 6.8 % 7.8 % Total revenue 100.0 % 100.0 % 100.0 % 100.0 % Interest Income. Total interest income decreased by $13.1 million, or 5.7%, from $231.4 million for the three months ended June 30, 2024 to $218.3 million for the three months ended June 30, 2025. This decrease was primarily due to the sale of the credit card portfolio on November 12, 2024 resulting in a decrease in portfolio yield of 106 basis points in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and a decline in our Average Daily Principal Balance, which decreased from $2.75 billion for the three months ended June 30, 2024 to $2.67 billion for the three months ended June 30, 2025, a decrease of 2.9%. Total interest income decreased by $23.5 million, or 5.1%, from $462.0 million for the six months ended June 30, 2024 to $438.5 million for the six months ended June 30, 2025. This decrease was primarily due to the sale of the credit card portfolio on November 12, 2024 resulting in a decline in our Average Daily Principal Balance, which decreased from $2.80 billion for the six months ended June 30, 2024 to $2.69 billion for the six months ended June 30, 2025, a decrease of 4.0%, and a decrease in portfolio yield of 27 basis points in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Non-interest income. Total non-interest income decreased by $3.0 million, or 15.5%, from $19.0 million for the three months ended June 30, 2024 to $16.1 million for the three months ended June 30, 2025. This decrease is primarily due to a $4.5 million decrease related to interest earned on our Set & Set product, including the recognition of $3.4 million of non-recurring interest during the three months ended June 30, 2024, $1.1 million decrease in subscription revenue on our Set & Save product, $1.0 million decrease in credit card related and other fees, and $0.6 million decrease in gain on loan sales. These decreases were partially offset by a $3.4 million increase in fees related to our Pathward program and $0.8 million increase in transaction fees, partnership referrals, and servicing fees. 30 Total non-interest income decreased by $7.2 million, or 18.4%, from $38.9 million for the six months ended June 30, 2024 to $31.7 million for the six months ended June 30, 2025. This decrease is primarily due to a $4.7 million decrease related to interest earned on our Set & Set product, including the recognition of $2.3 million of non-recurring interest during the six months ended June 30, 2024, a $2.1 million decrease in credit card related and other fees, a $2.1 million decrease in subscription revenue related to our Set & Save product, and a $0.6 million decrease in gain on loan sales. These decreases were partially offset by a $1.2 million increase in fees related to our Pathward program and $0.8 million increase in transaction and servicing fees. See Note 2, Summary of Significant Accounting Policies , and Note 12, Revenue , of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for further discussion on our interest income, non-interest income and revenue. Interest expense Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Interest expense $ 59,538 $ 54,244 $ 5,294 9.8 % $ 116,941 $ 108,709 $ 8,232 7.6 % Percentage of total revenue 25.4 % 21.7 % 24.9 % 21.7 % Cost of Debt 8.6 % 7.7 % 8.4 % 7.6 % Interest expense increased by $5.3 million, or 9.8%, from $54.2 million for the three months ended June 30, 2024 to $59.5 million for the three months ended June 30, 2025. The increase was driven by an 85 basis point increase in our Cost of Debt partially offset by a decrease to our Average Daily Debt Balance. Our Average Daily Debt Balance decreased from $2.82 billion for the three months ended June 30, 2024 to $2.78 billion for the three months ended June 30, 2025, a decrease of 1.3%. Our Cost of Debt has increased due to higher interest rates and credit spreads on current debt issuances as compared to lower cost funding issued in 2021 that is amortizing. Interest expense increased by $8.2 million, or 7.6%, from $108.7 million for the six months ended June 30, 2024 to $116.9 million for the six months ended June 30, 2025. The increase was driven by a 76 basis point increase in our Cost of Debt partially offset by a decline in our Average Daily Debt Balance. Our Average Daily Debt Balance decreased from $2.86 billion for the six months ended June 30, 2024 to $2.81 billion for the six months ended June 30, 2025, a decrease of 1.8%. Our Cost of Debt has increased due to higher interest rates and credit spreads on current debt issuances as compared to lower cost funding issued in 2021 that is amortizing. See Note 8, Borrowings , in the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for further information on our Interest expense and our Secured Financing and asset-backed notes. 31 Total net increase (decrease) in fair value Net increase (decrease) in fair value reflects changes in fair value of loans receivable held for investment and asset-backed notes at fair value on an aggregate basis and is based on a number of factors, including benchmark interest rates, credit spreads, remaining cumulative charge-offs and borrower payment rates. Increases in the fair value of loans increase Net Revenue. Conversely, decreases in the fair value of loans decrease Net Revenue. Increases in the fair value of asset-backed notes decrease Net Revenue. Decreases in the fair value of asset-backed notes increase Net Revenue. We also have a derivative instrument related to our bank partnership program with Pathward, N.A. Changes in the fair value of the derivative instrument are reflected in the total fair value mark-to-market adjustment below. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Fair value mark-to-market adjustment: Fair value mark-to-market adjustment on Loans Receivable at Fair Value $ 9,087 $ (36,692) $ 45,779 * $ 21,456 $ (7,754) $ 29,210 * Fair value mark-to-market adjustment on asset-backed notes at fair value (3,371) (1,910) (1,461) * (11,256) (29,033) 17,777 * Fair value mark-to-market adjustment on derivatives 18 950 (932) * 450 2,126 (1,676) * Total fair value mark-to-market adjustment 5,734 (37,652) 43,386 * 10,650 (34,661) 45,311 * Charge-offs, net of recoveries on Loans Receivable at Fair Value (78,960) (83,884) 4,924 * (160,253) (169,212) 8,959 * Net settlements on derivative instruments 2,968 3,803 (835) * 6,673 2,747 3,926 * Fair value mark on other loans sold — (18,386) 18,386 * — (51,843) 51,843 * Total net decrease in fair value $ (70,258) $ (136,119) $ 65,861 * $ (142,930) $ (252,969) $ 110,039 * Percentage of total revenue: Fair value mark-to-market adjustment 2.4 % (15.0) % 2.3 % (6.9) % Charge-offs, net of recoveries on Loans Receivable at Fair Value (33.7) % (33.5) % (34.1) % (33.8) % Total net increase (decrease) in fair value (31.2) % (48.5) % (31.8) % (40.7) % Discount rate 7.03 % 8.66 % 7.03 % 8.66 % Remaining cumulative charge-offs 11.96 % 11.57 % 11.96 % 11.57 % Average life in years 1.08 1.02 1.08 1.02 * Not meaningful Net decrease in fair value for the three months ended June 30, 2025 was $70.3 million. This amount represents $79.0 million of charge-offs, net of recoveries on Loans Receivable at Fair Value, a total fair value mark-to-market increase of $5.7 million, and $3.0 million increase related to the Pathward excess interest. The total fair value mark-to-market adjustment consists of a $9.1 million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) a decrease in the discount rate from 7.69% as of March 31, 2025 to 7.03% , partially offset by (b) an increase in remaining cumulative charge-offs from 11.83% as of March 31, 2025 to 11.96% as of June 30, 2025 . The $3.4 million mark-to-market loss on asset-backed notes is due to lower medium-term interest rates and tighter credit spreads. Net decrease in fair value for the three months ended June 30, 2024 was $136.1 million. This amount represents a total fair value mark-to-market decrease of $37.7 million, and $83.9 million of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment consists of a $36.7 million mark-to-market loss on Loans Receivable at Fair Value due to (a) $36.2 million mark-to-market loss in the fair value of our credit cards receivable related to management's decision to sell the portfolio and (b) $0.5 million mark-to-market loss on loans receivable at fair value. The $0.5 million mark-to-market loss on loans receivable at fair value was driven by a 0.9% decrease in weighted average life of the portfolio offset by a 44 basis point decrease in the discount rate and a 4 basis point decrease in the remaining cumulative charge offs. The $1.9 million mark-to-market loss on asset-backed notes is due to tighter credit spreads. The total net decrease in fair value for the three months ended June 30, 2024 also includes a $18.4 million loss related to the fair value mark on the loans sold as part of the other loan sales for the three months ended June 30, 2024. Net decrease in fair value for the six months ended June 30, 2025 was $142.9 million. This amount represents a total fair value mark-to-market increase of $10.7 million, and $160.3 million of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment consists of a $21.5 million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) a decrease in discount rate from 7.92% as of December 31, 2024 to 7.03% as of June 30, 2025 , partially offset by (b) an increase in remaining cumulative charge-offs from 11.68% as of December 31, 2024 to 11.96% as of June 30, 2025, and (c) a decrease in average life from 1.11 as of December 31, 2024 to 1.08 years as of June 30, 2025. The $11.3 million mark-to-market loss on asset-backed notes is due to lower medium-term interest rates and tighter credit spreads. Net decrease in fair value for the six months ended June 30, 2024 was $253.0 million. This amount represents a total fair value mark-to-market decrease of $34.7 million, and $169.2 million of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment consists of a $7.8 million mark-to-market loss on Loans Receivable at Fair Value due to (a) $36.2 million mark-to-market loss in 32 the fair value of our credit cards receivable related to management's decision to sell the portfolio, and (b) $28.4 million mark-to-market adjustment on loans receivable at fair value. The $28.4 million mark-to-market on loans receivable at fair value was driven by (a) a decrease in discount rate from 10.10% as of December 31, 2023 to 8.66% as of June 30, 2024, (b) a decrease in remaining cumulative charge-offs from 11.80% as of December 31, 2023 to 11.57% as of June 30, 2024, and (c) an increase in average life from 1.006 as of December 31, 2023 to 1.015 years as of June 30, 2024. The $29.0 million mark-to-market loss on asset-backed notes is due to lower medium-term interest rates and tighter credit spreads. The total net increase (decrease) in fair value for the six months ended June 30, 2024 includes $51.8 million in loss related to the fair value mark on loans sold as part of the other loan sales for the six months ended June 30, 2024 . Charge-offs, net of recoveries Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Total charge-offs, net of recoveries $ 78,960 $ 83,884 $ (4,924) (5.9) % $ 160,253 $ 169,212 $ (8,959) (5.3) % Average Daily Principal Balance $ 2,666,793 $ 2,745,667 $ (78,874) (2.9) % $ 2,685,899 $ 2,798,654 $ (112,755) (4.0) % Annualized Net Charge-Off Rate 11.9 % 12.3 % 12.0 % 12.2 % Our Annualized Net Charge-Off Rate decreased to 11.9% and 12.0% for the three and six months ended June 30, 2025, respectively, from 12.3% and 12.2% for the three and six months ended June 30, 2024, respectively. The decrease is primarily driven by a $4.9 million and $9.0 million decrease in our Net Charge-Offs; partially offset by a decrease in our Average Daily Principal Balance of $78.9 million and $112.8 million for the three and six months ended June 30, 2025, respectively. The decline in Net Charge-offs is primarily due to improvement in credit performance driven by increased front book vintages in our portfolio mix for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024. Our front book vintages have lower charge-off rates compared to our back book. As of June 30, 2025, loans from our back-book represented only 2% of our owned receivables balance, and as a result, we expect the back book to become less impactful in 2025. Consistent with our charge-off policy, we evaluate our loan portfolio and charge a loan off at the earlier of when the loan is determined to be uncollectible or when the loan is 120 days contractually past due and we charge-off a credit card account w hen it is 180 days contractually past due. Operating expenses Operating expenses consist of technology and facilities, sales and marketing, personnel, outsourcing and professional fees, and general, administrative and other expenses. We anticipate operating expenses to decrease in 2025 as compared to 2024, primarily driven by the continued diversification of the workforce to lower-cost geographies and a reduction in non-essential vendor spend. This will be partially offset by additional investments in loan originations. Technology and facilities Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our A.I.-enabled multi-channel platform, and consists of three components. The first component comprises costs associated with our technology, engineering, information security, cybersecurity, platform development, maintenance, and end user services, including fees for consulting, legal and other services as a result of our efforts to grow our business, as well as personnel expenses. The second component includes rent for retail and corporate locations, utilities, insurance, telephony costs, property taxes, equipment rental expenses, licenses and fees, and depreciation and amortization. Lastly, the third component includes all software licenses, subscriptions, and technology service costs to support our corporate operations, excluding sales and marketing. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Technology and facilities $ 36,649 $ 40,625 $ (3,976) (9.8) % $ 73,086 $ 87,730 $ (14,644) (16.7) % Percentage of total revenue 15.6 % 16.2 % 15.5 % 17.5 % Technology and facilities expense decreased by $4.0 million, or 9.8%, from $40.6 million for the three months ended June 30, 2024 to $36.6 million for the three months ended June 30, 2025. The decrease is primarily due to a $2.3 million decrease in depreciation, $1.2 million increased capitalization of internally developed software and other expenses, and $1.0 million decrease in outsourcing and professional fees. Technology and facilities expense decreased by $14.6 million, or 16.7%, from $87.7 million for the six months ended June 30, 2024 to $73.1 million for the six months ended June 30, 2025. The decrease is primarily due to a $4.4 million decrease in depreciation, $3.0 million decrease in software and service costs, $2.8 million increased capitalization of internally developed software, $2.4 million decrease in outsourcing and professional fees, and $2.1 million decrease in office rent. Sales and marketing Sales and marketing expenses consist of two components and represents the costs to acquire our members. The first component is comprised of the expense to acquire a member through various paid marketing channels including direct mail, digital marketing, and brand marketing. The second component is comprised of the costs associated with our telesales, lead generation and retail operations, including personnel expenses, but excluding costs associated with retail locations. 33 Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages and CAC) 2025 2024 $ % 2025 2024 $ % Sales and marketing $ 18,077 $ 16,258 $ 1,819 11.2 % $ 37,959 $ 32,261 $ 5,698 17.7 % Percentage of total revenue 7.7 % 6.5 % 8.1 % 6.4 % Customer Acquisition Cost (“CAC”) $ 115 $ 122 $ (7) (5.7) % $ 127 $ 139 $ (12) (8.6) % Sales and marketing expenses to acquire our members increased by $1.8 million, or 11.2%, from $16.3 million for the three months ended June 30, 2024 to $18.1 million for the three months ended June 30, 2025. The increase is primarily attributable to $1.0 million increase in marketing costs, such as direct mail and pay-per lead and $0.4 million increase in services costs. As a result of our increase in number of loans originated during the three months ended June 30, 2025, our CAC decreased by 5.7% from $122 for the three months ended June 30, 2024 to $115 for the three months ended June 30, 2025. Sales and marketing expenses to acquire our members increased by $5.7 million, or 17.7%, from $32.3 million for the six months ended June 30, 2024 to $38.0 million for the six months ended June 30, 2025 . The increase is primarily attributable to a $4.6 million increase in marketing costs and a $0.8 million increase in service costs. As a result of our increase in number of loans originated during the six months ended June 30, 2025 , our CAC decreased by 8.6% from $139 for the six months ended June 30, 2024 , to $127 for the six months ended June 30, 2025 . Personnel Personnel expense represents compensation and benefits that we provide to our employees, and include salaries, wages, bonuses, commissions, related employer taxes, medical and other benefits provided and stock-based compensation expense for all of our staff with the exception of our telesales, lead generation, and retail operations which are included in sales and marketing expenses and technology which is included in technology and facilities. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Personnel $ 20,247 $ 21,908 $ (1,661) (7.6) % $ 41,212 $ 46,424 $ (5,212) (11.2) % Percentage of total revenue 8.6 % 8.7 % 8.8 % 9.3 % Personnel expense decreased by $1.7 million, or 7.6%, from $21.9 million for the three months ended June 30, 2024 to $20.2 million for the three months ended June 30, 2025, primarily driven by our workforce optimization efforts which occurred in 2024. Personnel expense decreased by $5.2 million, or 11.2%, from $46.4 million for the six months ended June 30, 2024 to $41.2 million for the six months ended June 30, 2025, primarily driven by our workforce optimization efforts in 2024. Outsourcing and professional fees Outsourcing and professional fees consist of costs for various third-party service providers and contact center operations, primarily for the sales, customer service, collections and store operation functions. The costs related to our third-party contact centers that were located in Colombia and the Philippines are included in outsourcing and professional fees for the three months ended June 30, 2024 . These third-party contact centers previously provided business support, including application processing, verification, customer service and collections. Professional fees also include the cost of legal and audit services, credit reports, recruiting, cash transportation, collection services and fees and consultant expenses. Direct loan origination expenses related to application processing are expensed when incurred. In addition, outsourcing and professional fees include any financing expenses, including legal and underwriting fees, related to our asset-backed notes at fair value. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Outsourcing and professional fees $ 9,701 $ 8,375 $ 1,326 15.8 % $ 17,713 $ 18,616 $ (903) (4.9) % Percentage of total revenue 4.1 % 3.3 % 3.8 % 3.7 % Outsourcing and professional fees increased by $1.3 million, or 15.8%, from $8.4 million for the three months ended June 30, 2024 to $9.7 million for the three months ended June 30, 2025. The increase is primarily attributable to $1.1 million increase in debt recovery and court filing fees, $0.7 million increase in credit reports, and $0.6 million increase in debt financing fees. These were partially offset by a $0.9 million decrease in professional services and legal fees. Outsourcing and professional fees decreased by $0.9 million, or 4.9%, from $18.6 million for the six months ended June 30, 2024 to $17.7 million for the six months ended June 30, 2025. The decrease is primarily attributable to a $2.4 million decrease in professional services and legal fees and $0.9 million decrease in outsourcing services. These were partially offset by $2.1 million increase in debt recovery and court filing fees. General, administrative and other 34 General, administrative and other expense includes non-compensation expenses for employees, who are not a part of the technology and sales and marketing organization, which include travel, lodging, meal expenses, political and charitable contributions, office supplies, printing and shipping. Also included are franchise taxes, bank fees, foreign currency gains and losses, transaction gains and losses, debit card expenses, litigation reserve, expenses related to workforce optimization and streamlining operations, acquisition related expenses, and shareholder activism. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % General, administrative and other $ 9,769 $ 22,016 $ (12,247) (55.6) % $ 17,143 $ 33,793 $ (16,650) (49.3) % Percentage of total revenue 4.2 % 8.8 % 3.6 % 6.7 % General, administrative and other expense decreased by $12.2 million, or 55.6%, from $22.0 million for the three months ended June 30, 2024 to $9.8 million for the three months ended June 30, 2025, primarily due to $6.4 million decrease related to the prior year impairment of the San Carlos office right-of-use asset and disposal of related fixe d assets, $2.8 million decrease primarily related to the November 14, 2024 termination of Oportun RF, $2.7 million decrease related to prior year debt modification and amendment fees, $2.0 million decrease of workforce optimization costs, and $1.0 million decrease due to gains on foreign currency exchange. These were partially offset by $1.8 million increase related to shareholder activism and $0.5 million increase in fraud loans and franchise tax. General, administrative and other expense decreased by $16.7 million, or 49.3%, from $33.8 million for the six months ended June 30, 2024 to $17.1 million for the six months ended June 30, 2025, primarily due to $6.8 million decrease related to the prior year impairment of the San Carlos and San Francisco office right-of-use asset and disposal of related fixed assets, $5.8 million decrease primarily related to the November 14, 2024 termination of Oportun RF , $4.0 million decrease related to prior year debt modification and amendment fees, and $2.2 million decrease of workforce optimization costs. These were partially offset by $1.4 million increase related to shareholder activism, $0.9 million increase in postage and printing, and $0.9 million increase due to the write-off of uncollectible receivables. In connection with a previously announced cost reduction plan, the Company implemented a series of expense management actions during 2024, including a reduction of approximately 12% of corporate staff (excluding retail and contact center agents) and the closure of 39 retail locations. For the three and six months ended June 30, 2024 , the Company recorded non-recurring, pre-tax charges of $2.0 million related to corporate workforce reductions and $0.2 million and $0.9 million, respectively, related to retail closures, primarily consisting of severance, benefits, and other associated costs. Charges incurred during the corresponding periods in 2025 were insignificant. Income taxes Income taxes consist of U.S. federal, state and foreign income taxes, if any. For the periods ended June 30, 2025 and 2024, we recognized tax expense (benefit) attributable to U.S. federal, state and foreign income taxes. Three Months Ended June 30, Period-to-period Change Six Months Ended June 30, Period-to-period Change (in thousands, except percentages) 2025 2024 $ % 2025 2024 $ % Income tax expense (benefit) $ 3,231 $ (18,124) $ 21,355 (117.8) % $ 6,623 $ (22,160) $ 28,783 129.9 % Percentage of total revenue 1.4 % (7.2) % 1.4 % (4.4) % Effective tax rate 32.0 % 36.9 % 28.5 % 27.8 % Income tax expense increased by $21.4 million or 118%, from $18.1 million for the three months ended June 30, 2024 to $3.2 million expense for the three months ended June 30, 2025, primarily as a result of having a higher pre-tax income for the three months ended June 30, 2025. Income tax expense increased by $28.8 million or 130%, from $22.2 million benefit for the six months ended June 30, 2024 to $6.6 million expense for the six months ended June 30, 2025, primarily as a result of having a higher pre-tax income for the six months ended June 30, 2025 . As of June 30, 2025 , we have $78.0 million of U.S. net deferred tax assets, of which $68.4 million is related to the tax-effected net operating losses, tax credits, and other carryforwards that can be used to offset future U.S. taxable income. Certain of these carryforwards will expire if they are not used within a specified timeframe. At this time, we consider it more likely than not that we will have sufficient U.S. taxable income in the future that will allow us to realize these net deferred tax assets. However, it is possible that some, or all, of these tax attributes could ultimately expire unused. Therefore, if we are unable to generate sufficient U.S. taxable income from our operations, a valuation allowance to reduce the U.S. net deferred tax assets may be required, which would materially increase income tax expense in the period in which the valuation allowance is recorded. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements. See Note 2, Summary of Significant Accounting Policies , and Note 13, Income Taxes , of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for further discussion on our income taxes. 35 Fair Value Estimate Methodology for Loans Receivable at Fair Value Summary Fair value is an electable option under GAAP to account for any financial instruments, including loans receivable and debt. It differs from amortized cost accounting in that loans receivable and debt are recorded on the balance sheet at fair value rather than on a cost basis. Under the fair value option credit losses are recognized through income as they are incurred rather than through the establishment of an allowance and provision for losses. The fair value of instruments under this election is updated at the end of each reporting period, with changes since the prior reporting period reflected in the Condensed Consolidated Statements of Operations (Unaudited) as net increase (decrease) in fair value which impacts Net Revenue. Changes in interest rates, credit spreads, realized and projected credit losses and cash flow timing will lead to changes in fair value and therefore impact earnings. These changes in the fair value of the Loans Receivable at Fair Value may be partially offset by changes in the fair value of the asset-backed notes where the fair value option has been elected, depending upon the relative duration of the instruments. Fair Value Estimate Methodology for Loans Receivable at Fair Value We calculate the fair value of Loans Receivable at Fair Value using a model that projects and discounts expected cash flows. The fair value is a function of: • Portfolio yield; • Average life; • Prepayments (or principal payment rate for our credit card receivables); • Remaining cumulative charge-offs; and • Discount rate. Portfolio yield is the expected interest and fees collected from the loans and credit cards as an annualized percentage of outstanding principal balance. Portfolio yield is based upon (a) the contractual interest rate, reduced by expected delinquencies and interest charge-offs and (b) late fees, net of late fee charge-offs based upon expected delinquencies. Origination fees are not included in portfolio yield for personal loans since they are generally capitalized as part of the loan’s principal balance at origination. Average life is the time-weighted average of expected principal payments divided by outstanding principal balance. The timing of principal payments is based upon the contractual amortization of loans, adjusted for the impact of prepayments, Good Customer Program refinances, and charge-offs. For personal loans, prepayments are the expected remaining cumulative principal payments that will be repaid earlier than contractually required over the life of the loan, divided by the outstanding principal balance. For credit cards, we estimate principal payment rates which are the expected amount and timing of principal payments over the life of the receivable. Remaining cumulative charge-offs is the expected net principal charge-offs over the remaining life of the loans and credit cards, divided by the outstanding principal balance. For personal loans and credit card, the discount rate is determined by using the Weighted Average Capital Cost (“WACC”), which was calculated using the Capital Asset Pricing Model (“CAPM”) method, also considering several components of financing, debt and equity. Non-GAAP Financial Measures We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Operating Expense, Adjusted Operating Expense Ratio and Adjusted Return on Equity, can provide useful measures for period-to-period comparisons of our core business and useful information to investors and others in understanding and evaluating our operating results. However, non-GAAP financial measures are not calculated in accordance with United States generally accepted accounting principles, or GAAP, and should not be considered as an alternative to any measures of financial performance calculated and presented in accordance with GAAP. There are limitations related to the use of these non-GAAP financial measures versus their most directly comparable GAAP measures, which include the following: ▪ Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure. ▪ These measures do not consider the potentially dilutive impact of stock-based compensation. ▪ Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements. ▪ Although the fair value mark-to-market adjustment is a non-cash adjustment, it does reflect our estimate of the price a third party would pay for our loans receivable held for investment or our asset-backed notes. ▪ Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us. 36 Reconciliations of non-GAAP to GAAP measures can be found below. Adjusted EBITDA We define Adjusted EBITDA as our net income, adjusted to eliminate the effect of certain items as described below. We believe that Adjusted EBITDA is an important measure because it allows management, investors and our board to evaluate and compare operating results, including return on capital and operating efficiencies, from period to period by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of income taxes, certain non-cash items, variable charges and timing differences. • We believe it is useful to exclude the impact of income tax expense, as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. • We believe it is useful to exclude depreciation and amortization and stock-based compensation expense because they are non-cash charges. • We believe it is useful to exclude the impact of interest expense associated with our corporate financing facilities, including the senior secured term loan and the residual financing facility, as we view this expense as related to our capital structure rather than our funding. • We exclude the impact of certain non-recurring charges because we do not believe that these items reflect ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, debt amendment and warrant amortization costs related to our corporate financing facilities. • We also exclude fair value mark-to-market adjustments on the loans receivable portfolio and asset-backed notes carried at fair value because these adjustments do not impact cash. Components of Fair Value Mark-to-Market Adjustment (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Fair value mark-to-market adjustment on loans receivable at fair value (1) $ 9,087 $ (36,692) $ 21,456 $ (7,754) Fair value mark-to-market adjustment on asset-backed notes (3,371) (1,910) (11,256) (29,033) Fair value mark-to-market adjustment on derivatives 18 950 $ 450 $ 2,126 Total fair value mark-to-market adjustment $ 5,734 $ (37,652) $ 10,650 $ (34,661) (1) The fair value mark-to-market adjustment on loans receivable at fair value excludes mark-to-market adjustments associated with loans sold. See the section titled " Total net increase (decrease) in fair valu e" in the Results of Operations section for additional information regarding the fair value mark on loans sold. The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, Adjusted EBITDA (in thousands) 2025 2024 2025 2024 Net income (loss) $ 6,877 $ (31,025) $ 16,644 $ (57,464) Adjustments: Income tax expense (benefit) 3,231 (18,124) 6,623 (22,160) Interest on corporate financing 9,437 13,229 19,166 27,123 Depreciation and amortization 10,715 13,005 21,783 26,203 Stock-based compensation expense 2,708 3,004 5,539 6,986 Other non-recurring charges (1) 3,956 12,480 5,618 16,811 Fair value mark-to-market adjustment (5,734) 37,652 (10,650) 34,661 Adjusted EBITDA $ 31,190 $ 30,221 $ 64,723 $ 32,160 (1) Certain prior-period financial information has been reclassified to conform to current period presentation. Adjusted Net Income We define Adjusted Net Income as net income adjusted to eliminate the effect of certain items as described below. We believe that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and our Board to evaluate and compare our operating results, including return on capital and operating efficiencies, from period to period, excluding the after-tax impact of non-cash, stock-based compensation expense and certain non-recurring charges. • We believe it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. We also include the impact of normalized income tax expense by applying a normalized statutory tax rate. 37 • We believe it is useful to exclude the impact of certain non-recurring charges because we do not believe that these items reflect our ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, debt amendment and warrant amortization costs related to our corporate financing facilities. • We believe it is useful to exclude stock-based compensation expense because it is a non-cash charge. • We also exclude the fair value mark-to-market adjustment on our asset-backed notes carried at fair value to align with the 2023 accounting policy decision to account for new debt financings at amortized cost. The following table presents a reconciliation of net income (loss) to Adjusted Net Income (Loss) for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, Adjusted Net Income (in thousands) 2025 2024 2025 2024 Net income (loss) $ 6,877 $ (31,025) $ 16,644 $ (57,464) Adjustments: Income tax expense (benefit) 3,231 (18,124) 6,623 (22,160) Stock-based compensation expense 2,708 3,004 5,539 6,986 Other non-recurring charges (1) 3,956 12,480 5,618 16,811 Net decrease in fair value of credit cards receivable — 36,177 — 36,177 Mark-to-market adjustment on asset-backed notes 3,371 1,910 11,256 29,033 Adjusted income (loss) before taxes 20,143 4,422 45,680 9,383 Normalized income tax expense 5,439 1,194 12,334 2,533 Adjusted Net Income $ 14,704 $ 3,228 $ 33,346 $ 6,850 Income tax rate (2) 27.0 % 27.0 % 27.0 % 27.0 % (1) Certain prior-period financial information has been reclassified to conform to current period presentation. (2) Income tax rate for the three and six months ended June 30, 2025 and 2024 is based on a normalized statutory rate. Adjusted Earnings Per Share (“Adjusted EPS”) Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure that allows management, investors and our Board to evaluate the operating results, operating trends and profitability of the business in relation to diluted adjusted weighted-average shares outstanding. The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the three and six months ended June 30, 2025 and 2024. For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).” Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2025 2024 2025 2024 Diluted earnings (loss) per share $ 0.14 $ (0.78) $ 0.35 $ (1.46) Adjusted EPS Adjusted Net Income $ 14,704 $ 3,228 $ 33,346 $ 6,850 Basic weighted-average common shares outstanding 46,571,524 39,816,996 46,037,084 39,358,936 Weighted average effect of dilutive securities: Stock options — — — — Restricted stock units 1,321,648 469,445 1,431,371 458,515 Diluted adjusted weighted-average common shares outstanding 47,893,172 40,286,441 47,468,455 39,817,451 Adjusted Earnings Per Share $ 0.31 $ 0.08 $ 0.70 $ 0.17 Return on Equity and Adjusted Return on Equity We define Adjusted Return on Equity as annualized Adjusted Net Income (Loss) divided by average stockholders’ equity. Average stockholders’ equity is an average of the beginning and ending stockholders’ equity balance for each period. We believe Adjusted Return on Equity is an important measure because it allows management, investors and our Board to evaluate the profitability of the business in relation to stockholders’ equity and how efficiently we generate income from stockholders' equity. The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity as of and for the three and six months ended June 30, 2025 and 2024. For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).” 38 As of or for the Three Months Ended June 30, As of or for the Six Months Ended June 30, (in thousands) 2025 2024 2025 2024 Return on Equity 7.4 % (33.9) % 9.2 % (30.5) % Adjusted Return on Equity Adjusted Net Income $ 14,704 $ 3,228 $ 33,346 $ 6,850 Average stockholders' equity $ 371,044 $ 368,044 $ 364,899 $ 379,260 Adjusted Return on Equity 15.9 % 3.5 % 18.4 % 3.6 % Adjusted Operating Expense and Adjusted Operating Expense Ratio We define Adjusted Operating Expense as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, and debt amendment costs related to our Corporate Financing facility. We define Adjusted Operating Expense Ratio as Adjusted Operating Expense divided by Average Daily Principal Balance. We believe Adjusted Operating Expense is an important measure because it allows management, investors and our Board to evaluate and compare its operating costs from period to period, excluding the impact of non-cash, stock-based compensation expense and certain non-recurring charges. We believe Adjusted Operating Expense Ratio is an important measure because they allow management, investors and our Board to evaluate how efficiently we are managing costs relative to revenue and Average Daily Principal Balance. The following table presents a reconciliation of Operating Expense to Adjusted Operating Expense and Operating Expense Ratio to Adjusted Operating Expense Ratio for the three and six months ended June 30, 2025 and 2024: As of or for the Three Months Ended June 30, As of or for the Six Months Ended June 30, (in thousands) 2025 2024 2025 2024 Operating Expense Ratio 14.2 % 16.0 % 14.0 % 15.7 % Adjusted Operating Expense Ratio Total operating expense 94,443 109,182 187,113 218,824 Stock-based compensation expense (2,708) (3,004) (5,539) (6,986) Other non-recurring charges (1) (3,181) (12,083) (4,106) (16,021) Total adjusted operating expenses $ 88,554 $ 94,095 $ 177,468 $ 195,817 Average Daily Principal Balance $ 2,666,793 $ 2,745,667 $ 2,685,899 $ 2,798,654 Adjusted Operating Expense Ratio 13.3 % 13.8 % 13.3 % 14.1 % (1) Certain prior-period financial information has been reclassified to conform to current period presentation. Liquidity and Capital Resources To date, we fund the majority of our operating liquidity and operating needs through a combination of cash flows from operations, securitizations, secured borrowings, Corporate Financing and structured and whole loan sales. We may utilize these or other sources in the future. Our material cash requirements relate to funding our lending activities, our debt service obligations, our operating expenses, and investments in the long-term growth of the Company. We generally target liquidity levels to support at least twelve months of our expected net cash outflows, including new originations, without access to our Corporate Financing facility or equity markets. Elevated and fluctuating interest rates, credit trends and other macroeconomic conditions could continue to have an impact on market volatility which could adversely impact our business, liquidity, and capital resources. Future decreases in cash flows from operations resulting from delinquencies, defaults, and losses would decrease the cash available for the capital uses described above. We may incur additional indebtedness or issue equity in order to meet our capital spending and liquidity requirements, as well as to fund growth opportunities that we may pursue. The following table summarizes our total liquidity reserves: 39 June 30, 2025 (in thousands) Total capacity Amount borrowed/utilized Remaining available capacity Cash and cash equivalents $ 96,816 N/A $ 96,816 Restricted cash 131,406 N/A 131,406 Secured financing 953,630 335,336 618,294 Whole loan forward flow agreements 50,000 30,591 19,409 Total liquidity $ 1,231,852 $ 365,927 $ 865,925 Cash and cash flows The following table summarizes our cash and cash equivalents, restricted cash and cash flows for the periods indicated: Six Months Ended June 30, (in thousands) 2025 2024 Cash, cash equivalents and restricted cash $ 228,222 $ 236,636 Cash provided by (used in) Operating activities 205,505 193,609 Investing activities (107,862) (26,978) Financing activities (84,046) (136,011) Our cash is held for working capital purposes and originating loans. Our restricted cash principally represents collections held in our securitizations and is applied currently after month-end to pay principal, interest expense, and satisfy any amount due to whole loan buyers with any excess amounts returned to us. Operating Activities Our net cash provided by operating activities was $205.5 million and $193.6 million for the six months ended June 30, 2025 and 2024, respectively. Cash flows from operating activities primarily include net income or losses adjusted for (i) non-cash items included in net income or loss, including depreciation and amortization expense, goodwill impairment charges, fair value adjustments, net, origination fees for loans at fair value, net, gain on loan sales, stock-based compensation expense and deferred tax provision, net, (ii) originations of loans sold and held for sale, and proceeds from sale of loans and (iii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of various payments. The $11.9 million increase in our net cash provided by operating activities is primarily driven by a $74.1 million increase in our Net Income, $37.6 million increase in other, net, $24.9 million increase in our Changes in operating assets and liabilities, and $23.0 million increase in our sale of loans. These were partially offset by a $110.0 million decline in our fair value adjustment, net, $21.6 million decrease in our originations of loans sold and held for sale, $10.8 million decrease in our origination fees for loans receivable at fair value, net, and $5.8 million decrease in our depreciation and amortization and stock-based compensation expense. Investing Activities Our net cash used in investing activities was $107.9 million and $27.0 million for the six months ended June 30, 2025 and 2024, respectively. Our investing activities consist primarily of loan originations and loan repayments. We invest in purchases of property and equipment and incur system development costs. Purchases of property and equipment, and capitalization of system development costs may vary from period to period due to the timing of the expansion of our operations, the addition of employee headcount and the development cycles of our system development. The change in our net cash used in investing activities is primarily due to $93.2 million higher originations and purchases of loans held for investment, $3.7 million increase in capitalization of system development costs, and $2.2 million increase in proceeds from loan sales originated as held for investment. These were partially offset by an $18.2 million decrease in repayments of loan principal and for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Financing Activities Our net cash used in financing activities was $84.0 million and $136.0 million for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, net cash used in financing activities was primarily driven by amortization payments on our Series 2021-B, 2021-C, 2022-A, 2022-2, and 2022-3 Asset-backed notes at fair value; Series 2024-1 and 2024-2 Asset-backed borrowings at amortized cost, our other asset-backed borrowings, and repayments of borrowings on our PLW Facility, PLW II Facility, PLW III Facility, and Corporate Financing, partially offset by borrowings under our Asset-backed borrowings at amortized cost. For the six months ended June 30, 2024, net cash used in financing activities was primarily driven by amortization payments on our asset-backed notes and asset-backed borrowings and repayments of our Secured Financing and Acquisition and Corporate Financing facilities. These were partially offset by issuances of Asset-backed borrowings at amortized cost. Sources of Funds 40 Debt and Available Credit Asset-Backed Securitizations As of June 30, 2025, we had $1.9 billion of outstanding asset-backed notes. Our securitizations utilize special purpose entities which are also VIEs that meet the requirements to be consolidated in our financial statements. For more information regarding our VIEs and asset-backed securitizations, see Note 4, Variable Interest Entities and Note 8, Borrowings , respectively, of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report. Our ability to utilize our asset-backed securitizations as described herein is subject to compliance with various requirements including eligibility criteria for the loan collateral and covenants and other requirements . As of June 30, 2025, we were in compliance with all covenants and requirements of all our asset-backed notes. Secured Financings As of June 30, 2025 , we had Secured Financings with warehouse lines of $953.6 million in the aggregate with undrawn capacity of $618.3 million. On March 8, 2023, the Credit Card Warehouse facility was amended, reducing its commitment from $150.0 million to $120.0 million. On December 22, 2023, the Credit Card Warehouse facility was further amended, reducing its commitment from $120.0 million to $100.0 million, thereby reducing the combined commitment to $700.0 million. On January 31, 2024, we further amended the Credit Card Warehouse facility to adjust our payment rate, advance rate, and other loan sales. Additionally, our commitment amount reduced from $100.0 million to $80.0 million. On September 24, 2024, we further amended the Credit Card Warehouse facility and reduced the commitment amount from $80.0 million to $60.0 million. On November 10, 2024, the Credit Card Warehouse facility was terminated. Our ability to utilize our Secured Financing facilities as described herein is subject to compliance with various requirements, including eligibility criteria for collateral, concentration limits for our collateral pool, and covenants and other requirements. On August 5, 2024, in connection with the closing of the PLW II Facility, Oportun PLW II Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders from time to time party thereto, and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW II Facility has a three-year revolving period and a borrowing capacity of $245.2 million. Borrowings under the loan and security agreement accrue interest at a rate equal to Term SOFR plus a weighted average spread of 3.08%. The advance rate for the PLW II Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. On November 1, 2024, the PLW II Facility was amended t o increase the borrowing capacity to $337.1 million (the “PLW II Amendment”). Under the PLW II Amendment, borrowings will accrue interest at a rate equal to Term SOFR plus a weighted average spread of 3.07%. On September 20, 2024, Oportun PLW Trust, a subsidiary of the Company, Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank and certain lenders from time to time party thereto, entered into an amendment to the Loan and Security Agreement, dated as of September 8, 2021, and other related documents, under the PLW Facility. Following the amendment, the PLW Facility has a two-year revolving period and a borrowing capacity of $306.45 million. Borrowings under the PLW Facility loan and security agreement accrued interest at a rate equal to Term SOFR plus a weighted average spread of 3.40%. The advance rate for the PLW Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. On November 22, 2024, the PLW Facility was further amended to increase the borrowing capacity to $429.0 million (the “PLW Amendment”). Under the PLW Amendment, borrowings will accrue interest at a rate equal to Term SOFR plus a weighted average spread of 3.35%. On April 2, 2025, in connection with the closing of the PLW III Facility, Oportun PLW III Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders from time to time party thereto, and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW III Facility has a two-year revolving period and a borrowing capacity of $187.5 million. Borrowings under the loan and security agreement accrue interest at a rate equal to Term SOFR plus a weighted average spread up to 3.34%. The advance rate for the PLW III Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. Asset-Backed Borrowings at Amortized Cost On June 5, 2025, we issued $439.3 million of Series 2025-B asset backed notes secured by a pool of unsecured and secured personal installment loans (the "2025-B Securitization"). The 2025-B Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 5.67% per annum and weighted average coupon of 5.57% per annum. On January 16, 2025, we announced the issuance of $425.1 million of Series 2025-A asset-backed notes secured by a pool of our unsecured and secured personal installment loans (the "2025-A Securitization"). The 2025-A Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 6.95% per annum and weighted average coupon of 6.15% per annum. On August 29, 2024, we announced the issuance of $223.3 million of series 2024-2 asset-backed notes secured by a pool of our unsecured and secured personal installment loans (the "2024-2 Securitization"). The 2024-2 Securitization included four classes of fixed rate notes. The notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 8.22% per annum and weighted average coupon of 8.07% per annum. 41 On February 13, 2024, we announced the issuance of $199.5 million of Series 2024-1 asset-backed notes secured by a pool of our unsecured and secured personal installment loans (the "2024-1 Securitization"). The 2024-1 Securitization included four classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 8.60% per annum and weighted average coupon of 8.43% per annum. On October 20, 2023, we entered into a Receivables Loan and Security Agreement (the “Receivables Loan and Security Agreement”), pursuant to which the Company borrowed $197 million. Borrowings under the Receivables Loan and Security Agreement accrue interest at a weighted average interest rate equal to 10.05%. On August 3, 2023, we entered into a forward flow whole loan sale agreement with an institutional investor. Pursuant to this agreement, we had a commitment to sell up to $400.0 million of our personal loan originations over twelve months. We 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 our 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. No loans were transferred during the six months ended June 30, 2025 . We had previously fulfilled our commitment to sell loans under the agreement. On June 16, 2023, we entered into a forward flow whole loan sale agreement with an institutional investor. On April 26, 2024, we amended the agreement to extend the term through October 2024 and committed to sell $150.0 million of personal loan originations. We 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 our 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. No loans were transferred during the three months ended June 30, 2025 . We had previously fulfilled our commitment to sell loans under the agreement. Corporate Financing On September 14, 2022, we entered into the Original Credit Agreement with certain funds associated with Neuberger Berman Specialty Finance (“Neuberger”) as lenders, and Wilmington Trust, National Association, as administrative agent and collateral agent to borrow $150.0 million through a senior secured term loan (the “Original Credit Agreement” and the “Original Term Loan”). The Original Term Loan bore interest, payable in cash, at an amount equal to 1-month term SOFR plus 9.00%. The Original Term Loan was scheduled to mature on September 14, 2026, and was not subject to amortization. Certain prepayments of the Original Term Loan were subject to a prepayment premium. The obligations under the Original Credit Agreement were secured by our assets and certain of our subsidiaries guaranteeing the Original Term Loan, including pledges of the equity interests of certain subsidiaries that were directly or indirectly owned by us, subject to customary exceptions. On March 10, 2023 we upsized and amended the Original Credit Agreement to be able to borrow up to an additional $75.0 million (the “Amended Original Credit Agreement”). At closing and as part of the Incremental Tranche A-1 Loans, we borrowed $20.8 million and borrowed an additional $4.2 million in Incremental Tranche A-2 loans on March 27, 2023. Under the Second Amended Original Credit Agreement, we borrowed an additional $25.0 million of incremental term loans (the "Incremental Tranche B Loans") on May 5, 2023 and an additional $25.0 million of incremental term loans (the “Incremental Tranche C Loans”) on June 30, 2023. The Original Term Loan then bore interest at (a) an amount payable in cash equal to 1-month term SOFR plus 9.00% plus (b) an amount payable in cash or in kind, at our option, equal to 3.00%. On March 12, 2024, the Company entered into an amendment to the Second Amended Original Credit Agreement (the “Third Amended Original Credit Agreement”), which includes modifications to the minimum asset coverage ratio covenant levels, provides for an interest rate step-up of 3.00% per annum for certain months beginning in August 2024 in which the asset coverage ratio is less than 1.00 to 1.00, and required certain principal payments in amounts equal to $5.7 million per month to be made on the last business day of each of March, April and May 2024. In addition, the Third Amended Credit Agreement required principal payments equal to 100% of the net cash proceeds of any future issuance of indebtedness junior in priority to the obligations under the Original Credit Agreement, as amended. On November 14, 2024, the Original Credit Agreement, as amended, was terminated and the associated outstanding Original Term Loan was repaid in full, in connection with the Credit Agreement disclosed below . On October 23, 2024, we entered into a Credit Agreement with certain affiliates of Neuberger and McLaren Harbor LLC as lenders, and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent, pursuant to which we borrowed $235 million through a senior secured term loan (the “Credit Agreement” and the “Term Loan”). The Term Loan bears interest at (a) a cash rate of 12.50% per annum plus (b) an amount payable in cash or in kind, at our option, equal to 2.50% and is scheduled to mature on November 14, 2028. On November 14, 2024, we repaid in full the Original Credit Agreement, as amended. Certain prepayments under the Agreement are subject to a prepayment premium. The obligations under the Credit Agreement are secured by our assets and certain of subsidiaries guaranteeing the loan, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by us, subject to customary exceptions. The Credit Agreement contains several financial covenants; these covenants are included together with other customary affirmative and negative covenants (including reporting requirements), representations and warranties and events of default . Under the Credit Agreement, we were required to repay a combined $12.5 million and $27.5 million of the Term Loan, prior to July 31, 2025 and January 31, 2026, respectively. We have repaid $5.0 million and $7.5 million on March 3, 2025 and April 30, 2025, respectively. Consequently, the $12.5 million repayment obligations under the Credit Agreement with respect to fiscal year 2025 have been satisfied. As of June 30, 2025, we were in compliance with all covenants and requirements on our outstanding debt and available credit. For more information regarding our Secured Financings and Corporate Financing, see Note 8, Borrowings of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report. Other loan sales From time to time, we may enter into agreements to sell certain populations of our personal loans, including non-performing loans originated as 42 held for investment. For the six months ended June 30, 2025 , we did not sell any such loans. For further information, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report. Whole loan sales In November 2022, we entered into a forward flow whole loan sale agreement with an institutional investor. Pursuant to this agreement, we have a commitment, through December 2025, to sell a minimum of $2.0 million of our unsecured loan originations each month, with an option to sell up to $4.2 million each month, subject to certain eligibility criteria. The agreement is scheduled to expire in December 2025. In November 2023, we entered into a forward flow whole loan sale agreement with an institutional investor, under which we expect to sell approximately $100 million of our secured and unsecured personal loans in fiscal year 2025, subject to certain eligibility criteria. This agreement is scheduled to expire in November 2026. The originations of loans sold and held for sale during the six months ended June 30, 2025 were $72.2 million. For further information on the whole loan sale transactions, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report. Bank Partnership Program and Servicing Agreement We entered into a bank partnership program with Pathward, N.A. on August 11, 2020. In accordance with the agreements underlying the bank partnership program, we have 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. Contractual Obligations and Commitments The material cash requirements for our contractual and other obligations primarily include those related our outstanding borrowings under our asset-backed notes, Secured Financings, corporate and retail leases, and purchase commitments for technology used in the business. See Note 8, Borrowings and Note 15, Leases, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for more information. Liquidity Risks We believe that our existing cash balance, anticipated positive cash flows from operations and available borrowing capacity under our credit facilities will be sufficient to meet our anticipated cash operating expense and capital expenditure requirements through at least the next 12 months. We do not have any significant unused sources of liquid assets. If our available cash balances are insufficient to satisfy our liquidity requirements, we will seek additional debt or equity financing and we may have to take additional actions to decrease expenses, curtail the origination of loans, and our ability to continue to support our growth and to respond to challenges could be impacted. In a higher interest rate environment, our ability to issue additional equity or incur debt may be impaired and our borrowing costs may increase. If we raise additional funds through the issuance of additional debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior to shares of our common stock. The sale of equity may result in dilution to our stockholders and those securities may have rights senior to those of our common stock. We may require additional capital beyond our currently anticipated amounts and additional capital may not be available on reasonable terms, or at all. Critical Accounting Policies and Significant Judgments and Estimates Our Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. There have been no material changes in our critical accounting policies from those disclosed in our Annual Report on Form 10-K dated December 31, 2024 , filed with the Securities and Exchange Commission on February 20, 2025, as amended ("2024 Form 10-K"), under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations. For additional information about our critical accounting policies and estimates, see the disclosure included in our 2024 Form 10-K. Recently Issued Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for a discussion of recent accounting pronouncements and future application of accounting standards. 43 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "Smaller Reporting Company" as defined by Item 10 of Regulations S-K, the Company is not required to provide this information.