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 and nine months ended September 30, 2026 and 2025.

Total revenue

Interest Income. Total interest income increased by $9.1 million, or 4.1%, from $222.3 million for the three months ended September 30, 2025 to $231.4 million for the three months ended September 30, 2026 driven by an increase in origination fee income from a 12% increase in aggregate originations.

Total interest income increased by $5.5 million, or 0.8%, from $660.8 million for the nine months ended September 30, 2025 to $666.4 million for the nine months ended September 30, 2026 primarily due to an increase in origination fee income driven by increased origination volume and origination rates, partially offset by a decline in billed interest on loans.

Non-interest income. Total non-interest income decreased by $1.5 million, or 9.2%, from $16.3 million for the three months ended September 30, 2025 to $14.8 million for the three months ended September 30, 2026. This decrease is primarily due to a decrease in servicing fees related to our Pathward program.

Total non-interest income decreased by $6.2 million, or 12.9%, from $48.1 million for the nine months ended September 30, 2025 to $41.9 million for the nine months ended September 30, 2026. This decrease is primarily due to a $6.1 million decrease in servicing fees related to our Pathward program.

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 decreased by $15.5 million, or 27.4%, from $56.6 million for the three months ended September 30, 2025 to $41.1 million for the three months ended September 30, 2026. Our interest expense decrease is primarily due to a 193 basis point decrease in our Cost of Debt driven by improvements from revised cash flow estimates in our asset-backed borrowings at amortized cost, reductions of higher-cost asset-backed borrowings at amortized cost, and continued paydowns of the Corporate financing. Our Average Daily Debt Balance decreased from $2.79 billion for the three months ended September 30, 2025 to $2.67 billion for the three months ended September 30, 2026, adecrease of 4.4%.

Interest expense decreased by $42.5 million, or 24.5%, from $173.6 million for the nine months ended September 30, 2025 to $131.0 million for the nine months ended September 30, 2026. Thedecrease was driven by a 179 basis point decrease in our Cost of Debt, and by a decline in our Average Daily Debt Balance. Our Average Daily Debt Balance decreased from $2.80 billion for the nine months ended September 30, 2025 to $2.70 billion for the nine months ended September 30, 2026, a decrease of 3.7%. The Cost of Debt has decreased primarily due to continued paydowns of the asset-backed borrowings at amortized cost.

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 decrease in fair value

Total net 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. 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 the three months ended September 30, 2026 was $78.6 million. This amount represents $71.4 million of charge-offs, net of recoveries on Loans Receivable at Fair Value and a total fair value mark-to-market decrease of $7.2 million. The total fair value mark-to-market adjustment consists of a$(6.5) million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) anincrease in the discount rate from 6.30% as of June 30, 2026 to 6.53% as of September 30, 2026, partially offset by (b) adecrease in remaining cumulative charge-offs from 12.22% as of June 30, 2026 to 12.01% as of September 30, 2026.

Net decrease in fair value for the three months ended September 30, 2025 was $77.0 million. This amount represents $79.6 million of charge-offs, net of recoveries on Loans Receivable at Fair Value and a total fair value mark-to-market decrease of $0.8 million; offset by a $3.4 million increase related to excess interest proceeds received on loans retained by Pathward. The total fair value mark-to-market adjustment includes of a$6.6 million mark-to-market increase on Loans Receivable at Fair Value due to (a) adecrease in the discount rate from 7.03% as of June 30, 2025 to 6.25%, partially offset by (b) anincrease in remaining cumulative charge-offs from 11.96% as of June 30, 2025 to 12.23% as of September 30, 2025. The$4.6 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 nine months ended September 30, 2026 was $250.1 million. This amount represents a total fair value mark-to-market decrease of $14.7 million, and $235.3 million of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment includes of a$12.7 million mark-to-market decrease on Loans Receivable at Fair Value due to (a)an increase in discount rate from 6.26% as of December 31, 2025 to 6.53% as of September 30, 2026, partially offset by (b) a decrease in remaining cumulative charge-offs from 12.28% as of December 31, 2025 to 12.01% as of September 30, 2026. The $3.2 million mark-to-market loss on asset-backed notes isdue to amortization of the principal balance and tighter credit spreads, partially offset by higher medium-term interest rates.

Net decrease in fair value for the nine months ended September 30, 2025 was $219.9 million. This amount represents a total fair value mark-to-market increase of $9.8 million, and $239.8 million of charge-offs, net of recoveries on Loans Receivable at Fair Value. The total fair value mark-to-market adjustment includes of a$28.1 million mark-to-market increase on Loans Receivable at Fair Value due to (a)a decrease in discount rate from 7.92% as of December 31, 2024 to 6.25% as of September 30, 2025, partially offset by (b) an increase in remaining cumulative charge-offs from 11.68% as of December 31, 2024 to 12.23% as of September 30, 2025, and (c) a decrease in average life from 1.11 as of December 31, 2024 to 1.07 years as of September 30, 2025. The $15.8 million mark-to-market loss on asset-backed notes isdue to lower medium-term interest rates and tighter credit spreads.

Charge-offs, net of recoveries

Charge-Offs, net of recoveries decreased by $8.2 million for the three months ended September 30, 2026 and decreased by $4.5 million for the nine months ended September 30, 2026. The Annualized Net Charge-Off Rate decrease for the nine months ended September 30, 2026 was primarily attributable to continued diligence in underwriting, particularly among new members, the development and release of improved risk models, and continuous improvement of our collections strategies and operations. We employ collection strategies and tools to help members make ongoing payments against their loans, and 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 low single digit increase 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 $3.2 million, or 9.1%, from $35.4 million for the three months ended September 30, 2025 to $32.2 million for the three months ended September 30, 2026. The decrease is primarily due to $1.9 million in lower technology services and software costs and $1.4 million in lower amortization expense related to internally developed software.

Technology and facilities expense decreased by $9.9 million, or 9.1%, from $108.5 million for the nine months ended September 30, 2025 to $98.6 million for the nine months ended September 30, 2026. The decrease is primarily due to a $6.7 million decrease primarily driven by reduced amortization and increased capitalization of costs relating to internally developed software, $2.0 million decrease due to our strategy to lower contractor spending and $1.2 million decrease in lower spend on software; this was partially offset by a $1.5 million increase in wages and salaries.

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 $4.6 million, or 28.0%, from $16.5 million for the three months ended September 30, 2025 to $21.1 million for the three months ended September 30, 2026 driven by an increase in direct mail marketing volume. As a result of the increase in sales and marketing expense, CACincreased by 27.2%, from$103 for the three months ended September 30, 2025 to$131 for the three months ended September 30, 2026.

Sales and marketing expenses to acquire our members increased by $0.2 million, or 0.4%, from $54.5 million for the nine months ended September 30, 2025 to $54.7 million for the nine months ended September 30, 2026. During thenine months ended September 30, 2026, our CAC increased by 11.0% from $118 for thenine months ended September 30, 2025 to $131 for thenine months ended September 30, 2026 driven by the decrease in our number of loans originated.

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 increased by $7.1 million, or 37.3%, from $19.0 million for the three months ended September 30, 2025 to $26.1 million for the three months ended September 30, 2026, primarily due to increases in wages, salaries, bonus accruals and additional severance amounts.

Personnel expense increased by $15.9 million, or 26.4%, from $60.2 million for the nine months ended September 30, 2025 to $76.1 million for the nine months ended September 30, 2026, primarily due to executive transition costs and increased wages and salaries driven by increased headcount primarily in our Mexico operations, and bonus accruals.

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 increased by $1.0 million, or 10.7%, from the three months ended September 30, 2025 to the three months ended September 30, 2026 primarily due to increased legal collections costs and other legal expenses.

Outsourcing and professional fees increased by $1.7 million, or 6.1%, from $27.1 million for the nine months ended September 30, 2025 to $28.8 million for the nine months ended September 30, 2026. The increase is due to increased legal collections costs.

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, litigation reserve, acquisition-related expenses, and shareholder activism.

General, administrative and other expense decreased by $8.3 million, or 79.2%, from $10.5 million for the three months ended September 30, 2025 to $2.2 million for the three months ended September 30, 2026, primarily due to $5.6 millionnon-recurring interest and fees payment received in connection with the resolution of a Mexico value-added tax refundand $3.1 million reduction in shareholder activism-related expenses.

General, administrative and other expense decreased by $12.5 million, or 45.2%, from $27.6 million for the nine months ended September 30, 2025 to $15.2 million for the nine months ended September 30, 2026, primarily due to $5.6 millionnon-recurring interest and fees payment received in connection with the resolution of a Mexico value-added tax refund, $5.6 million reduction in shareholder activism-related expenses, and $1.9 million decrease in fees paid from loan purchases as part of ourbank partnership program.

Income taxes

Income taxes consist of U.S. federal, state and foreign income taxes, if any. For the periods ended September 30, 2026 and 2025, we recognized tax expense attributable to U.S. federal, state and foreign income taxes.

Income tax expense increased by $2.6 million or 29%, from $9.0 million for the three months ended September 30, 2025 to $11.7 million for the three months ended September 30, 2026, primarily due to higher pre-tax income and stock-based compensation.

Income tax expense increased by $4.3 million or 27%, from $15.7 million for the nine months ended September 30, 2025 to $20.0 million for the nine months ended September 30, 2026, primarily due to higher pre-tax income, resolving a state tax settlement, and increasing the reserve for unrecognized tax benefits.

Valuation Allowance. As of September 30, 2026, we have $61.3 million of U.S. net deferred tax assets, of which $58.6 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.

In December 2021, the Organization for Economic Co-operation and Development Inclusive Framework on Base Erosion Profit Shifting released Model Global Anti-Base Erosion rules (“Model Rules”) under Pillar Two. The Model Rules set forth the “common approach” for a Global Minimum Tax at 15 percent for multinational enterprises with a turnover of more than 750 million euros. Rules under Pillar Two were effective from January 1, 2024. Pillar Two rules did not have a material impact on the Company's Condensed Consolidated Statements of Operations (Unaudited).

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.