Oportun Financial Corp

Results of Operations

The following tables and related discussion set forth our Condensed Consolidated Statements of Operations (Unaudited) for each of the three months ended March 31, 2025 and 2024.

Total revenue

Total interest income decreased by $10.4 million, or 4.5%, from $230.6 million for the three months ended March 31, 2024 to $220.2 million for the three months ended March 31, 2025. The decrease is primarily attributable to$146.4 million, or 5.1%, decrease in our Average Daily Principal Balance from $2.9 billion for the three months ended March 31, 2024 to $2.7 billion for the three months ended March 31, 2025, primarily due to the sale of the credit card portfolio. The decrease was partially offset by an increase in portfolio yield of 49 basis points in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Total non-interest income decreased by $4.2 million, or 21.2%, from $19.9 million for the three months ended March 31, 2024 to $15.7 million for the three months ended March 31, 2025. The decrease is primarily due to a $2.2 million decrease in fees related to our Pathward program, $1.3 million decrease in subscription revenue, and $1.0 million attributable to a decrease in revenue from the credit card portfolio, which was sold in November 2024; this was partially offset by $0.3 million increase in servicing fees and sublease income.

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

Interest expense increased by $2.9 million, or 5.4%, from $54.5 million for the three months ended March 31, 2024 to $57.4 million for the three months ended March 31, 2025. Our interest expense increase is primarily due to 65 basis point increase in Cost of Debt, offset by a 2.2% decrease in average debt balance. The 65 basis point increase is 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.

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.

• Not meaningful

Net decrease in fair value for the three months ended March 31, 2025 was $72.7 million. This amount represents a total fair value mark-to-market increase of $4.9 million on Loans Receivable at fair value, Asset-backed notes, and our derivative assets. The total fair value mark-to-market adjustment consists of a $12.4 million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) a decrease in the discount rate from 7.92% as of December 31, 2024 to 7.69% as of March 31, 2025, offset by (b) a decrease in average life from 1.11 years as of December 31, 2024 to 1.10 years as of March 31, 2025 and (c) an increase in remaining cumulative charge-offs from 11.68% as of December 31, 2024 to 11.83% as of March 31, 2025. The $(7.9) million mark-to-market adjustment on asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. There was no adjustment as part of the other loans sales in the three months ended March 31, 2025. We expect to continue to see volatility in fair value primarily as a result of macroeconomic conditions.

Net decrease in fair value for the three months ended March 31, 2024 was $116.9 million. This amount represents a total fair value mark-to-market increase of $3.0 million on Loans Receivable at fair value, Asset-backed notes, and our derivative assets. The total fair value mark-to-market adjustment consists of a $28.9 million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) a decrease in remaining cumulative charge-offs from 12.10% as of December 31, 2023 to 11.92% as of March 31, 2024, (b) a decrease in the discount rate from 10.10% as of

December 31, 2023 to 9.10% as of March 31, 2024, and (c) an increase in the weighted average life from 1.01 years as of December 31, 2023 to 1.03 years as of March 31, 2024 . The $(27.1) million mark-to-market adjustment on asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. The total net decrease in fair value for the three months ended March 31, 2024 also includes a $(33.5) million adjustment related to the fair value mark on the loans sold as part of the other loans sales for the three months ended March 31, 2024.

Charge-offs, net of recoveries

Our Annualized Net Charge-Off Rate increased to 12.2% for the three months ended March 31, 2025 from 12.0% for the three months ended March 31, 2024. The increase is primarily driven by a decrease in our Average Daily Principal balance of 5% to $2.7 billion from $2.9 billion for the three months ended March 31, 2025 and 2024, respectively, partially offset by a $4.0 million decrease in Net Charge-offs. 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 three months ended March 31, 2025 compared to 2024. Our front book vintages have lower charge-off rates compared to our back book. As of March 31, 2025, loans from our back-book represented only 4% 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 when 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.

Technology and facilities expense decreased by $10.7 million, or 22.6%, from $47.1 million for the three months ended March 31, 2024 to $36.4 million for the three months ended March 31, 2025. The decrease is primarily due to a $2.1 million decrease in depreciation, a $2.0 million decrease in service costs, a $1.4 million decrease in outsourcing and professional fees, and $1.4 million decrease in office rent, $1.3 million decrease in software, and $0.7 million decrease in salaries and benefits.

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.

Sales and marketing expense to acquire our members increased by $3.9 million, or 24.2%, from $16.0 million for the three months ended March 31, 2024 to $19.9 million for the three months ended March 31, 2025. The increase was primarily attributable to an increase in our direct mail marketing. As a result of our increase in sales and marketing expense during thethree months ended March 31, 2025, our CAC increased by 0.7%, from $138 for the three months ended March 31, 2024 to $139 for the three months ended March 31, 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.

Personnel expense decreased by $3.6 million, or 14.5%, from $24.5 million for the three months ended March 31, 2024 to $21.0 million for the three months ended March 31, 2025. The decrease is attributable to a reduction in wages and salary, stock-based compensation expense, and benefits primarily driven by the 2024 reduction in force.

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 March 31, 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.

Outsourcing and professional fees decreased by $2.2 million, or 21.8%, from $10.2 million for the three months ended March 31, 2024 to $8.0 million for the three months ended March 31, 2025. The decrease is primarily attributable to a $0.7 million decrease in outsourced call center professionals due to a shift to in-house call centers, $0.7 million decrease in legal fees, and $0.5 million decrease related to the termination of services related to our credit card program.

General, administrative and other

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, and acquisition related expenses.

General, administrative and other expense decreased by $4.4 million, or 37.4%, from $11.8 million for the three months ended March 31, 2024 to $7.4 million for the three months ended March 31, 2025, primarily due to the $3.0 million decrease in acquisition and integration related expense and $0.8 million decrease in expense related to our initiatives to streamline operations.

Income taxes

Income taxes consist of U.S. federal, state and foreign income taxes, if any. For the periods ended March 31, 2025 and 2024, we recognized tax expense (benefit) attributable to U.S. federal, state and foreign income taxes.

Income tax benefit decreased by $7.4 million, from $4.0 million benefit for the three months ended March 31, 2024 to $3.4 million expense for the three months ended March 31, 2025, primarily due to higher pretax income for the three months ended March 31, 2025.

As of March 31, 2025, we have $78.0 million of U.S. net deferred tax assets, of which $71.2 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.

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.