Oportun Financial ( OPRT ) is trading ~28% lower after its Q2 earnings beat, because of a lowered FY22 profit expectations, reflecting a weakening macroeconomic backdrop.
Q2 non-GAAP EPS of $0.11 (vs. $0.56 Y/Y) beats by $0.02, while revenue of $226M (+63.4% Y/Y) beats by $11.4M.
Revenue primarily increased on higher interest income due to growth in the company's underlying portfolio as a result of increased origination volume.
Q2 adjusted EBITDA was -$4.5M, compared to $4.5M in the year-ago quarter.
For FY22, revenue guidance is in the range of $930M - $940M (vs. consensus of $923.27M). EPS guidance is in the range of $1.19 - $1.34 (vs. consensus of $2.49)
Initial revenue estimate was in the range of $875M - $900M, and EPS estimate was between $2.32 and $2.46.
"Since the end of the quarter, however, we have observed that the weakening macroeconomic environment, including higher inflation and gas prices, have started impacting our numbers more than it previously had," CEO Raul Vazquez said .
The company has seen an uptick in delinquencies since the Q2-end, particularly among borrowers with lower free cash flows and those with smaller loans with shorter maturities, according to Vazquez.
"As the macroeconomic environment has weakened, we have taken prudent measures to tighten our credit exposure and reduce our expense growth," the CEO said.
The core personal loan product sees the least tightening, while credit card receivables and secured personal loan receivable targets sees a significant tightening, Vazquez told analysts.
"While we expect to have elevated loss rates for the third and fourth quarters of this year, our current projection is that losses will start decreasing in the first quarter of 2023 and return to our target 7% to 9% range within a year," CFO Jonathan Coblentz said.
BTIG Analyst Mark Palmer lowered the company's price target to $21 from $27, keeping a Buy rating on the stocks. Palmer said he continues to believe in Oportun Financial's long-term prospects for growth and profitability, especially given the ultimate impact of its nationwide roll-out and the contributions of its digital banking app Digit.
Barclays Analyst Mark DeVries also lowered the price target on OPRT to $12 from $15.
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Oportun Financial falls ~28% after revised FY22 profit expectations, analysts lower price target