Oportun Financial Corp

Results of Operations

The following tables and related discussion set forth our Consolidated Statements of Operations for the years ended December 31, 2025 and 2024. For a discussion regarding our operating and financial data for the year ended December 31,2024, as compared to the same period in 2023, refer to Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 20, 2025.

Total revenue

Interest income. Total interest income decreased by $32.2 million, or 3.5%, from $925.5 million for 2024 to $893.2 million for 2025. The decrease is primarily attributable to a decline in our Average Daily Principal Balance, which declined from $2.77 billion for 2024 to $2.70 billion for 2025, a decrease of 2.3%, primarily due to the sale of our credit card portfolio, This was additionally driven by adecrease in portfolio yield of 39 basis points in the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to secured personal loans—which generally carry lower contractual yields than our unsecured personal loans—representing a larger portion of our originations.

Non-interest income. Total non-interest income decreased by $12.8 million, or 16.8%, from $76.3 million for 2024 to $63.5 million for 2025. The decrease was primarily driven by a $6.8 million decline in interest earned on Set & Save member accounts, a $3.7 million decline attributable to the sale of the credit card portfolio, a $3.2 million decrease in subscription revenue, and a $2.0 million decrease in servicing and documentation fees. These decreases were partially offset by a $1.3 million increase in gain on loan sales and a $1.2 million increase in income from our strategic partnerships.

See Note 2, Summary of Significant Accounting Policies, and Note 12, Revenue, of the Notes to the Consolidated Financial Statements included elsewhere in this report for further discussion on our interest income, non-interest income and revenue.

Interest expense

Interest expense decreased by $6.7 million, or 2.8%, from $238.2 million for 2024 to $231.5 million for 2025. Our Average Daily Debt Balance decreased from $2.85 billion to $2.82 billion for 2025, adecrease of 0.8%. Our Cost of Debt hasdecreased primarily due to higher cost asset-backed securitizations being replaced with lower cost asset-backed securitizations.

See Note 8, Borrowings, in the Notes to the Consolidated Financial Statements included elsewhere in this report for further information on our Interest expense and our borrowings.

Total net decrease in fair value

Total net decrease in fair value 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. As of December 31, 2025 we also had a derivative instrument related to our bank partnership program with Pathward. Changes in the fair value of the derivative instrument are reflected in the total fair value mark-to-market adjustment below.

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Net decrease in fair value for 2025 was $319.3 million. This amount represents a total fair value mark-to-market increase of $0.1 million on Asset-backed notes, Loans Receivable at Fair Value, and our derivative assets. The total fair value mark-to-market adjustment consists of a decrease in the discount rate from 7.92% as of December 31, 2024 to 6.26% as of December 31, 2025, partially offset by a $33.0 million mark-to-market adjustment on Loans Receivable at Fair Value due toan increase in remaining cumulative charge-offs from 11.68% as of December 31, 2024 to 12.28% as of December 31, 2025 and a decrease in average life from 1.11 years as of December 31, 2024 to 1.06 yearsas of December 31, 2025. The $17.8 million mark-to-market adjustment on Asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. The net decrease in charge-offs, net of recoveries, for 2025 was $325.5 million.

Net decrease in fair value for 2024 was $468.4 million. This amount represents a total fair value mark-to-market decrease of $69.3 million on Asset-backed notes, Loans Receivable at Fair Value, and our derivative assets. The total fair value mark-to-market adjustment consists of a$(1.7) million mark-to-market adjustment on Loans Receivable at Fair Value due toa decrease in remaining cumulative charge-offs from 12.10% as of December 31,2023 to 11.68% as of December 31, 2024, a decrease in the discount rate from 10.10% as of December 31,2023 to 7.92% as of December 31, 2024, and an increase in average life from 1.01 years as of December 31,2023 to 1.11 yearsas of December 31, 2024. These were offset by a $33.7 million decrease in fair value associated with the sale of the credit cards receivable portfolio. The$(72.1) million mark-to-market adjustment on Asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. The net decrease in charge-offs, net of recoveries, for 2024 was $331.4 million. The total net decrease in fair value for the year ended December 31, 2024 includes a$(75.2) million adjustment related to the fair value mark on other loan sales in 2024.

See Item 1A. Risk Factors for further discussion of the risks associated with our fair value elections on our financial statements.

Charge-offs, net of recoveries

Net Charge-Offs decreased by $5.9 million for the year ended December 31, 2025. The annualized net charge-off rate increased 7 basis points due to a 2.3% decrease in average daily principal balance, offset by a 1.8% decrease in total charge-offs net of recoveries. 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.

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 be substantially flat in 2026 as compared to 2025.

Technology and facilities

Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our 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 $23.7 million, or 14.3%, from $166.2 million for 2024 to$142.4 million for 2025. The decrease is primarily due to a $6.4 million reduction in amortization, driven by the write-off of certain credit card portfolio software and lower amortization of other internally developed software assets, a $3.8 million increase in capitalization of internally developed software, a $3.3 million decrease in our outsourcing and professional fees, a $2.6 million decrease in amortization of intangible assets, a $2.5 million decrease in office rent due to the 2024 impairment of a right-of-use asset related to our San Carlos office, and a $2.0 million decrease in software costs due to lower usage and lower renewal costs. The decrease was also driven by a $1.6 million decrease in depreciation of computer hardware and leasehold improvements following store closures and a $1.2 million decrease primarily due to the absence of termination fees incurred in 2024 related to discontinued products

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 expenses to acquire our members increased by $3.6 million, or 5.4%, from $67.0 million for 2024 to $70.6 million for 2025. Our increase in sales and marketing expenses during the year ended December 31, 2025 was primarily attributable to a $1.2 million increase in direct mail marketing volume and a $1.1 million increase in our customer referral program. Sales and marketing expense also increased due to a $1.0 million increase in salaries and benefits. As a result of our increase in number of loans originated during the year ended December 31, 2025, our CAC decreased by 6.4%, from $125 for the year ended December 31, 2024, to $117 for the year ended December 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 $7.2 million, or 8.3%, from $87.2 million for 2024, to $79.9 million for 2025. The decrease isprimarily driven by our workforce optimization efforts in 2023 and 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. 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 $2.1 million, or 5.6%, from $36.8 million for 2024 to $34.8 million for 2025. The decrease is primarily attributable to a $2.9 million decrease in professional consulting services, a $1.3 million decrease in legal fees, and a $1.1 million decrease in outsourced services. These were offset by a $2.2 million increase in expenses associated with debt recovery and court filings and $1.1 million increase in credit reports due to increased loan application volume.

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, acquisition-related expenses, and shareholder activism.

General, administrative and other expense decreased by $19.2 million, or 36.1%, from $53.2 million for 2024, to $34.0 million for 2025, primarily due to a $9.0 million decrease primarily related to interest of deferred costs related to our Acquisition Financing, which was terminated in November 2024, a $6.7 million decrease related to impairment of right-of-use asset and fixed asset disposal of our San Carlos office, a $2.8 million decrease related to the 2024 sale of the credit card portfolio and aged vendor balances, a $2.2 million decrease from costs associated with our 2024 debt extinguishment, a $2.1 million decrease in bank origination fees, and $2.1 million decrease from our lower costs related to our workforce optimization. These decreases were partially offset by a $5.2 million increase related to activism and proxy efforts, and a $2.3 million increase in postage and printing driven by higher volumes of operational and collections related customer communications.

Income taxes

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

Income tax expense increased by $55.3 million or 151.6%, from $36.5 million benefit for 2024 to $18.8 million expense for 2025, primarily due to having a higher pre-tax income for 2025, compared to a pre-tax loss in 2024.

Valuation Allowance. As of December 31, 2025, we have $65.8 million of U.S. net deferred tax assets, of which $62.9 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 Consolidated Financial Statements included elsewhere in this report for further discussion on our income taxes.